“If I want to move my stock portfolio from a non-registered account to a TFSA, do I need to pay capital gains tax?”

“If I want to move my stock portfolio from a non-registered account to a TFSA, do I need to pay capital gains tax?”

Mike

There are some considerations if you’re thinking of moving investments from a non-registered account to a tax-free savings account (TFSAs). TFSAs allow investors to save for any goal and, as the name suggests, grow their investments tax free. Contributions to a TFSA is not tax-deductible (it is after-tax income). However, income earned in the account and withdrawn is generally tax free.

There are certain investments that are permitted in a TFSA – visit the CRA website for a complete list. In transferring a qualifying stock portfolio to a TFSA, you may trigger a tax event. You usually don’t need to sell your stocks first (you may need to sell if you are transferring between financial institutions), but this type of “in-kind” transfer is considered a disposition by the Canada Revenue Agency – meaning you may need to report a capital gain if the fair market value of the stock has gone up since you purchased it. If the stock value has gone down, you cannot claim the capital loss. As tax rules are enforced by the Canada Revenue Agency, if you have questions about this type of transfer, contact them. You can also learn more about TFSAs in this CRA publication: Tax-Free Savings Account (TFSA), Guide for Individuals. You may also want to speak with an accountant or your financial advisor to assist you in determining whether this move is right for you.

“I just opened an RRSP account and made my first contribution. How do I invest that money in an ETF and keep it inside the RRSP?”

“I just opened an RRSP account and made my first contribution. How do I invest that money in an ETF and keep it inside the RRSP?”

Diego

An exchange-traded fund (ETF) is an investment fund that holds a collection of investments, such as stocks or bonds owned by a group of investors and managed by a professional money manager. ETFs trade on a stock exchange and can be sold short or margined. You can also trade in futures and options on ETFs.

“If I convert a LIRA to a LIF this month do I still have 60 days to unlock 50%?”

“If I convert a LIRA to a LIF this month do I still have 60 days to unlock 50%?”

Bev B.

Rules related to Locked-In Retirement Accounts (LIRAs) and Life Income Funds (LIFs) in Ontario are regulated by the Financial Services Commission of Ontario (FSCO). Information on locked-in accounts can be found on FSCO’s website.

A LIF created now would be considered a New LIF. For information related to the 50% unlocking withdrawal or transfer. New LIF information, including the 50% unlocking withdrawal or transfer, can be found in this FSCO publication.

“I want to withdraw the total amount in my RRIF. What do I need to know about tax?”

“I want to withdraw the total amount in my RRIF. What do I need to know about tax?”

Anne P.

Each year there is a minimum amount you must withdraw from your Registered Retirement Income Fund (RRIF) based on your age. Any withdrawals in excess of this amount are subject to a withholding tax. Even though withholding tax is deducted from withdrawals that exceed the minimum amount, you may still owe more tax later when you file your tax return. It depends on your total income and tax situation.

A registered financial advisor or tax professional can help you determine the amount of tax you may owe by looking at the full picture of your retirement income and other personal financial information.

“How does the stock market work?”

“How does the stock market work?”

HT

The stock market brings together people who want to sell stock with those who want to buy stock. The buyer and seller must agree on a price before a stock can be bought or sold. When you buy stock (or equity) in a company, you receive a piece of the company and become a part owner. The stock market is made up of the:

“My father fears he will lose half his estate to taxes. What is the max he can take our of RRIF without losing pension and OAS?”

“My father fears he will lose half his estate to taxes. What is the max he can take our of RRIF without losing pension and OAS?”

Alain G.

While we do our best to provide general information, we are not able to provide advice. The Old Age Security (OAS) pension recovery tax is based on total income, not just withdrawals from a Registered Retirement Income Fund (RRIF). Speak to a registered financial advisor or tax professional to learn how the rules apply and to calculate this number based on a full review of your father’s financial information.

“My bank’s financial advisor is managing my RRSP at the moment, but I am interested in managing it myself. Is there a fee involved?”

“My bank’s financial advisor is managing my RRSP at the moment, but I am interested in managing it myself. Is there a fee involved?”

Xingguang H.

If you are interested in managing your RRSP yourself, you may consider looking into setting up a self-directed RRSP. Self-directed RRSPs are available at investment firms — both full-service and discount brokerage firms. You can hold many different investments in a single self-directed plan. If you’d like advice on how to invest and manage your RRSP savings, open an account with a full-service brokerage.

There are costs involved in managing a self-directed RRSP. First, there may be costs involved in transferring your current RRSP. For a self-directed RRSP, you may pay a set-up fee, an annual trustee fee, and sales charges or commissions for buying and selling investments. You may also pay a fee for investment advice or for managing your investments. Commissions are likely to be lower at a discount brokerage, but you’ll need to be comfortable making investment decisions on your own. Before you set up an account, ask questions and make sure you understand the costs involved.

“Does it make sense to withdraw CPP payments earlier and invest the payments?”

“Does it make sense to withdraw CPP payments earlier and invest the payments?”

Ray

You can receive monthly Canada Pension Plan (CPP) payments starting as early as your 60th birthday. What you get depends on what you paid into the plan while you were working. You must be 59 or older and apply 9 months before you retire. Learn more about CPP from the Government of Canada.

Even if you don’t have to file a return (for example, if you have no income to report), you may still choose to file a return in order to take advantage of certain refundable tax credits and benefits, and to build RRSP contribution room. Learn more reasons to file a tax return.

“Are there any courses available for investors? I want to have an all-encompassing understanding of investing/stocks.”

“Are there any courses available for investors? I want to have an all-encompassing understanding of investing/stocks.”

Logan S.

The Canadian Securities Administrators (CSA) and Ontario Securities Commission (OSC) do not offer investing courses and therefore cannot endorse any courses available to investors. In addition, regardless of an individual’s depth of understanding of investing, investment products or markets, there is no way to guarantee that you will make money investing. All investments come with risks.

Individuals who are registered to sell investments or provide financial advice are required to complete specific courses offered by institutions in Canada. These courses may be open to investors who are interested in taking them, excepting any courses with required prerequisites. One such institution, the Canadian Securities Institute (CSI), offers a version of the Canadian Securities Course specifically for investors. You can learn about the course on the CSI website.

“We redeemed a 5-year locked-in GIC one year early due to financial hardship. The bank withheld part of the interest – is this allowed?”

Because guaranteed investment certificates (GICs) are not considered securities, but rather a banking product, the Ontario Securities Commission does not regulate this type of investment. We suggest you speak to your financial institution (typically the bank where you purchased the GIC) for specific questions related to your investment.

If you have a complaint about your GIC, it may be helpful for you to know that complaints about banks and banking products should be directed to the Financial Consumer Agency of Canada (FCAC). Learn how to contact the FCAC.

You open a RRIF by transferring money from your RRSP. Transfers from other registered plans like pension plans and DPSPs are allowed under certain circumstances. Funds from a non-registered account cannot be contributed to a RRIF.

“Is transferring funds from non-registered investments to TFSA tax efficient or the best source of funds?”

“Is transferring funds from non-registered investments to TFSA tax efficient or the best source of funds?”

Mary

Generally, you can transfer investments in-kind from a non-registered investment account to a Tax-Free Savings Account (TFSA) as long as you have the available contribution room. However, you may have to pay tax if the value of the investments has gone up since you purchased them (in other words, you have a capital gain). Once your investments are in the TFSA, they will grow tax free.

We are not able to provide advice and cannot tell you whether this type of transfer would be beneficial to you. Speak to a registered financial advisor to learn more transferring investments to a TFSA and what is right for your financial goals and needs.

You can transfer investments, such as stocks or bonds, from a non-registered account to your RRSP. This is called a transfer “in kind”. You might do this if you don’t have the cash to make your contribution, but you have investments that you want to use instead.

This has tax consequences, however. You are considered to have sold your investments at their fair market value and will have to report any resulting gain on your tax return. You can claim an RRSP deduction equal to the fair market value of the investments transferred to your RRSP. If the fair market value results in a loss, in order to claim the loss on your tax return, you must first sell the investments and then contribute the cash proceeds to your RRSP. Learn more about RRSP transfers.

The question you need to answer first is: are you planning to keep your investments in a Tax-Free Savings Account (TFSA)? If you want to take your current TFSA funds and move them to a non-registered investment account, you can withdraw the funds from your TFSA at any time.

However, if you want to move your current TFSA funds to a TFSA investment account, you must have the financial institution(s) handle the transfer directly between the TFSAs. This is to ensure that the funds are not considered “withdrawn” and “recontributed” in the same year, which would be considered an over-contribution and may be penalized.

“How do I sell options?”

“How do I sell options?”

Lyle

A stock option is a contract that gives the buyer the right – but not the obligation – to buy or sell a stock at a specific price on or before a certain date. You don’t have to invest directly in the stock. You can just buy the option. One option usually gives you the right to buy or sell 100 shares of a stock.

If you own stock options that you wish to sell, you will need to set up an account with a full-service or discount broker. Generally there are transaction fees to buy or sell in an investment account. Speak to a registered financial advisor for information on buying and selling options, and for information on the associated fees.

“Is there a limit to my RRSP contribution that be contributed to my spousal RRSP?”

“Is there a limit to my RRSP contribution that be contributed to my spousal RRSP?”

Kevin O.

A spousal RRSP is registered in the name of your spouse or common-law partner. They own the investments in the RRSP, but you contribute to it. You get the tax deduction for any contributions you make to a spousal RRSP. Any contributions you make reduce your own RRSP deduction limit for the year. They won’t affect how much your spouse can contribute to their own RRSP.

“I expect to pay $8,000 in income tax this year. Can I make that $0 if I contribute $8,000 to my RRSP?”

When you make a contribution to your Registered Retirement Savings Plan (RRSP), the contribution amount is deducted from your overall taxable income for that year – the basis for calculating the income taxes you owe. For example, if you earned income of $50,000 and contributed $8,000 to your RRSP, you will only be taxed on an income of $42,000. The immediate savings to your income tax will depend on your income tax bracket. You can find the federal and provincial income tax brackets from the Canada Revenue Agency.

A registered financial advisor or tax professional can help you in handling your income taxes and can help you determine what will work best specific to your financial goals and personal financial needs.

“Do you pay taxes if you withdraw from a RRIF before you are 71?”

“Do you pay taxes if you withdraw from a RRIF before you are 71?”

Amanda

Once you open a Registered Retirement Income Fund (RRIF), regardless of your age, you must start making withdrawals, starting the year following opening the plan. The Canada Revenue Agency (CRA) sets a schedule of minimum annual withdrawals, increasing each year as you age.

RRIF withdrawals must be included as income at tax time, and any amounts over the minimum withdrawal are subject to a withholding tax.

For more information on withdrawals from a RRIF, speak to your registered financial advisor or the financial institution where you have your account.

“I want to take some money out to buy a house – is it tax free?”

“I want to take some money out to buy a house – is it tax free?”

Cheryl P.

There are questions that need to be asked before your question can be answered. First – what type of account are you withdrawing money from? If it is a non-registered account, you will be subject to any taxes on your investments – for example, on interest income or capital gains when selling your investments. If it is a Tax-Free Savings Account (TFSA), then you can generally withdraw money at any time for any purpose without paying taxes. If it is a Registered Retirement Savings Plan (RRSP), you may be able to take some money out tax free – more on this below.

Second, is it your first home? If you are withdrawing money to buy your first home, you may be eligible for the Home Buyers’ Plan to withdraw up to $25,000 tax free from your RRSP. Learn more about the Home Buyers’ Plan.

“Can I find the name of shareholders of a Canadian corporation that is not a public company?”

“Can I find the name of shareholders of a Canadian corporation that is not a public company?”

Nancy R.

Under securities law in Ontario, public companies are required to share information on major shareholders. For more information, see this previous Re: Investing question.

You may be able to obtain a list of registered shareholders from a company that is not public by contacting the company directly. However, they would not be required to provide this information under securities law in Ontario.

One key consideration when saving money for short-term goals (like buying a home) or emergencies is the liquidity of your investments – this means how easy it is to access your money when you need it.

If an unexpected expense comes up, you will need to access your money quickly. Learn more about planning for emergencies.

When saving for a home down payment, you may consider keeping the money separate from other savings, growing your money safely in no-risk or low-risk investments, or saving in an RRSP if you’re a first-time buyer. Learn more about saving for a down payment.

“My wife is 64, can I make a withdrawal from my RRIF tax free?”

Your question may be referring to the option to make withdrawals from a Registered Retirement Income Fund (RRIF) using your spouse’s age. If your spouse is younger than you, you can use their age to calculate your minimum amount. You don’t have to have a spousal RRIF or name your spouse as the RRIF beneficiary to use their age for your minimum amount. However, you must tell your financial institution that you’re doing so before you make your first RRIF withdrawal. And you can’t change your mind later.

If you have already started making withdrawals from your RRIF, you cannot start making withdrawals using your spouse’s age. In addition, regardless of age, you cannot make a tax-free withdrawal. A RRIF can be set up at any time, and a schedule of minimum withdrawals must be followed starting the year after a RRIF is opened. Learn more about making RRIF withdrawals.

“Where can I get a chart for total return rather than simply price return?”

“Where can I get a chart for total return rather than simply price return?”

Albert W.

New account statements include reporting on how much you’ve made or lost in your account over specific periods of time using a “personal rate of return”. Your personal rate of return is calculated using a “money-weighted” formula, which reflects any deposits or withdrawals you made to or from your account, the income you earned (such as dividends or interest), and changes in the market value of the investments that you’re holding in the account.

This is different from a “time-weighted” calculation of your account’s performance, which only shows the rate of return for money that is invested and left in the same investment until the end of a certain time period (such as one year). A time-weighted rate of return doesn’t reflect any deposits or withdrawals you make into or out of your account, meaning that it doesn’t consider how your account’s performance is affected by its cash-flows.

“What is the difference between capital gains and dividends?”

“What is the difference between capital gains and dividends?”

Interest – Investments like savings accounts, GICs and bonds pay interest. With these types of investments, you generally know exactly how much money you’re going to earn on your investment.

Dividends – Some stocks pay dividends, which give investors a share of what the company makes. You get a regular income from these investments. The amount of the dividend depends on how well the company did that year and what type of stock you own.

Capital gains – As an investor, if you sell an investment like a stock, bond, mutual fund or ETF, for more than you paid for it, you’ll have a capital gain. If you sell it for less than you paid for it, you’ll have a capital loss.

“Can I put UK shares in my TFSA?”

“Can I put UK shares in my TFSA?”

Jill B.

Similar to holding foreign securities inside an RRSP, see this previous Re: Investing question for information from the Canada Revenue Agency (CRA) regarding qualified investments for registered plans.

We are not able to provide investment advice. While you may be able to hold foreign securities inside a TFSA, foreign dividends are subject to a foreign dividend withholding tax – holding these stocks inside a TFSA may not shield you from this tax. Speak to a registered financial advisor and your accountant for information on qualified foreign investments, including foreign mutual funds, and any tax considerations and questions regarding foreign currency conversion inside an RRSP before you invest.

“Are mutual fund fees based on the fund’s market value each quarter?”

“Are mutual fund fees based on the fund’s market value each quarter?”

May K.

The fund’s management fee and operating expenses make up a fund’s management expense ratio or MER. They are paid by the fund, and are expressed as an annual percentage of the total value of the fund. While you don’t pay these expenses directly, they affect you because they reduce the fund’s returns. The MER is charged whether or not the fund does well, and is based on the average value of the fund.

The fund sets how often the fee is taken from returns – this could be as often as daily. Learn more about mutual fund fees.

Registered firms and individuals must follow rules and policies of the Ontario Securities Commission, or the self-regulatory organization (SRO), such as the Investment Industry Regulatory Organization of Canada, or the Mutual Fund Dealers Association of Canada, as applicable, depending on the category of registration. To understand these rules better, for example, relating to potential conflicts of interest between advisors and clients, it is recommended to contact the SROs directly.

The only category of registration that requires a fiduciary duty is a portfolio manager – individuals hold registration as advising representatives. Advising representatives and the firms they work for provide investment advice and manage your portfolio according to the instructions or discretionary authority you have given. Before you consider working with an adviser registered as a Portfolio Manager, always check their registration.

“What is the difference between ‘investment advisor’ and ‘financial advisor’?”

“What is the difference between ‘investment advisor’ and ‘financial advisor’?”

Christine

Under securities law, there are two main categories for registration: dealers and advisors. The terms “dealer” and “adviser” are legal terms that describe a broad range of people who can deal in (trade) or give advice about securities. They may use a variety of titles, such as investment advisor or financial advisor, financial planner, investment consultant or investment specialist. These titles are not legally defined terms or official registration categories.

A person’s registration is more informative than their title because it tells you the type of products or services they can offer. For example, a person registered as a mutual fund dealing representative can sell and provide product advice on mutual funds, but they are not qualified to sell or provide advice on stocks or bonds. Registration granted by the OSC is not an endorsement, but is a minimum requirement for companies or persons advising or trading in securities with Ontario residents.

Registered firms and individuals must follow rules and policies of the OSC, or the self-regulatory organization, such as IIROC, or the Mutual Fund Dealers Association of Canada, as applicable, depending on the category of registration. Before using the services of a financial advisor, always check their registration.

“I need to withdraw from my RRSP to cover an emergency. If I withdraw now and fully repay by next year, what is the tax effect?”

“I need to withdraw from my RRSP to cover an emergency. If I withdraw now and fully repay by next year, what is the tax effect?”

Blair

We are not able to provide advice. However, general information is provided below. For more information, speak to a registered financial advisor to learn more about the tax consequences of making an early RRSP withdrawal.

You can take money out of your RRSP before you retire – for example, to cover an emergency situation. But you will pay an immediate tax on the money you take out (called a withholding tax), and possibly more at tax time. You’ll also permanently lose the contribution room you originally used to make the contribution – with RRSPs, there is no option to “repay”, unless you are making the withdrawal using a program such as the Home Buyers’ Plan (to buy your first home) or Lifelong Learning Plan (to pay for your or your spouse’s education). Learn more about making RRSP withdrawals before you retire.

If you have a “locked-in RRSP”, the Financial Services Commission of Ontario (FSCO) regulates pensions including locked-in RRSP accounts. Learn how to contact FSCO and information on locked-in accounts.

“Can I put U.S. mutual funds in my RRSP?”

“Can I put U.S. mutual funds in my RRSP?”

George R.

Rules governing what can and cannot be held inside a Registered Retirement Savings Plan (RRSP) or other federally registered accounts are set and enforced by the Canada Revenue Agency. Visit the CRA’s website to learn more about qualified investments for registered plans.

Generally you can hold U.S. mutual funds and other foreign securities inside an RRSP. However, speak to a registered financial advisor and your accountant for information on qualified foreign investments, including foreign mutual funds, and any tax considerations and questions regarding foreign currency conversion inside an RRSP before you invest.

“What is the minimum and maximum withdrawal rate on a LIF?”

“What is the minimum and maximum withdrawal rate on a LIF?”

The rules regarding withdrawals are set by FSCO. Depending on when you opened your LIF, you either have a “New LIF” or “Old LIF” under this regulation. The rules for New LIFs and Old LIFs are available on FSCO’s website.

“Can a lender refuse to cash in a GIC early?”

“Can a lender refuse to cash in a GIC early?”

Amy F.

We try to provide general information to help you get started; however we are not always able to provide answers to your questions. The Ontario Securities Commission (OSC) is an independent Crown corporation that administers and enforces securities law in Ontario. Because guaranteed investment certificates (GICs) are not considered securities, but rather a banking product, we suggest you speak to your financial institution (typically the bank where you purchased the GIC) for specific questions related to your investment.

Generally speaking, GICs come in one of two forms: redeemable (or cashable) GICs and non-redeemable (or regular) GICs. If they are non-redeemable, your financial institution may not allow you to cash them early, and if they do, you may have to pay a penalty and/or lose interest on your investment. Learn more about GICs.

If you have a complaint about your GIC, it may be helpful for you to know that complaints about banks and banking products should be directed to the Financial Consumer Agency of Canada (FCAC). Learn how to contact the FCAC.

“What online company can I use to buy stocks that is safe and secure?”

“What online company can I use to buy stocks that is safe and secure?”

Hazel

Re: Investing is a website managed by the Ontario Securities Commission’s Investor Office. We are not able to provide advice, or suggest the names of online investment firms. However, companies and individuals that offer investment advice or sell investments must be registered to provide these services in the province or territory where they operate.

Always check the registration of any person or business trying to sell you an investment or give you investment advice. Take steps to better protect yourself by checking registration before you invest and knowing the common warning signs of investment fraud. Use the Canadian Securities Administrators’ National Registration Search to check the registration.

Since all firms registered as Investment Dealers are members of the Investment Industry Regulatory Organization of Canada (IIROC), which is a self-regulatory organization, another option is to review the list of IIROC dealer members on their website.

Being registered is not a guarantee that the person you deal with will always give you good advice or act ethically. Carefully choose who you invest with, and ask these questions before you invest with a new advisor.

“Am I able to transfer from one TFSA account to another TFSA account without it counting as a contribution?”

“Am I able to transfer from one TFSA account to another TFSA account without it counting as a contribution?”

Daniel

First, though we try to provide as much information as we can, we are not able to provide any specific investment or financial advice. Generally, if you have more than one Tax-Free Savings Account (TFSA), you can transfer funds between them. It won’t affect your TFSA contribution room — as long as the transfer is done directly between the TFSAs. Speak to your financial institution or registered investment firm to find out how to do this.

If you withdraw money yourself from one TFSA and contribute that amount to another TFSA, it will be considered a separate contribution – not a transfer. That contribution will reduce, and may even exceed, your TFSA contribution room for the year. If you over-contribute you’ll pay a penalty.

“What should I save annually for retirement if I expect to receive 7.5% interest? I am 22 years old.”

“What should I save annually for retirement if I expect to receive 7.5% interest? I am 22 years old.”

Amalia

Retirement planning is about managing your money so you can make the most of your retirement years. Your retirement plan should balance your needs, wants and the reality of your finances. A retirement plan can help you set goals, have a better idea of how much you need to save, and helps you choose what to invest in, and what investment vehicles will work best for you.

When you start saving makes a big difference in how much you need to put away. The younger you are when you start, the less money you may have to put aside regularly, thanks to the power of compounding. GetSmarterAboutMoney.ca has some tools you can use to help you estimate how much you may be able to save. Try the Compound Interest Calculator, RRSP Savings Calculator, and TFSA Calculator.

“Why does the withholding tax on RRIF withdrawals get higher as I get older?”

“Why does the withholding tax on RRIF withdrawals get higher as I get older?”

Sophia G.

The withholding tax on Registered Retirement Income Fund (RRIF) withdrawals is not based on age, but rather on the amount withdrawn in excess of the minimum annual withdrawal amount. For withdrawals up to $5,000 a 10% withholding tax rate applies, between $5,000 and $15,000 the rate is 20%, and for withdrawals more than $15,000, a 30% rate applies. Withholding rates are different for residents of Quebec.

Even though withholding tax is deducted from withdrawals that exceed the minimum amount, you may still owe more tax later when you file your tax return. It depends on your total income and tax situation. Learn more about making withdrawals from your RRIF.

Speak to your financial institution if you have questions related to the withholding tax on your account.

“Does making a lump-sum withdrawal from an RDSP trigger the LDAP?”

“Does making a lump-sum withdrawal from an RDSP trigger the LDAP?”

Dan

A Registered Disability Savings Plan (RDSP) allows people with disabilities and their families to save for their future. Government grants add to your savings and your investments grow tax-free. There are two types of RDSP payments:

Disability assistance payments (DAPs) – Discretionary payments that can be made at any time.

Lifetime disability assistance payments (LDAPs) – Regular payments that once started, are payable at least annually, and must be started by the end of the year that the beneficiary turns 60.

“How can you calculate a life annuity payment if you invest $500,000 and expect to live 20 years?”

“How can you calculate a life annuity payment if you invest $500,000 and expect to live 20 years?”

Liz

Annuity payments are calculated at the time you purchase the annuity. There are various factors that affect annuity payments – one of the main factors is the current interest rate. Learn more about factors that can affect annuity income.

Speak to an annuity provider to learn how the payment is calculated, and what you can expect to receive. Annuities are insurance products. Insurance providers are regulated by province or territory. In Ontario this is the Financial Services Commission of Ontario (FSCO).

“Can a RRIF be converted to an annuity?”

“Can a RRIF be converted to an annuity?”

In short – it depends. You can purchase an annuity with funds from any source – whether registered or non-registered funds. The difference is in the tax that you pay. You can purchase an annuity with the proceeds of your RRSP when you are ready to convert your savings to retirement income. Other options at this time are to set up a RRIF or take your RRSP proceeds as cash – or any combination of these.

Once you set up a RRIF, you must start making annual minimum withdrawals. If you transfer proceeds from your RRIF directly to an annuity issuer, you may be able to receive a deduction on the excess amount of your RRIF withdrawal, that is, the amount above the minimum for that year. Learn more from the Canada Revenue Agency, and speak to a registered financial advisor or tax professional to understand whether this would apply to you.

“How can I diversify my portfolio?”

“How can I diversify my portfolio?”

Mussie D.

Diversification is a way to try to reduce the risk of your portfolio by choosing a mix of investments. Investors diversify their portfolios because not all types of investments perform well at the same time, and different types of investments are affected differently by world events and changes in economic factors such as interest rates, exchange rates and inflation rates. The key to diversification is to not put everyone in one investment. Your overall investment portfolio should match your risk tolerance, but each investment may have different characteristics, to minimize overall risk.

One way to diversify your portfolio is to invest in several asset classes. An asset class is a group of investments with similar risk and return characteristics. The three main asset classes are cash and equivalent investments, fixed income investments, and equity investments.

You can diversify within an asset class, but simply increasing the number of stocks will not reduce risk. To diversify, you need to select stocks whose prices are less likely to move together – for example, diversifying by investing in different industries (e.g. financial services, energy, health care and utilities).

“What determines the value of a stock?”

“What determines the value of a stock?”

Sal

Many factors can cause the price of a stock to rise or fall – correctly determining how a stock price will change is extremely difficult, even for market experts. There are some general factors that can affect stock prices, including:

Industry performance – for example, general market conditions or the performance of a major competitor.

Investor sentiment – for example, confidence in the markets, and whether the market is currently weak (bear market) or strong (bull market).

Economic factors – for example, interest rates, inflation, changes in economic policy, change in the value of the Canadian dollar, etc.

Financial Position – for example, the financial position of the company, the status of its business operations, and its ability to maintain a listing for its shares in a public market will also affect the price established in the marketplace

“Can I transfer multiple RRSPs to a single RRIF? Do I need to transfer them all at once or can I do them each over time?”

“Can I transfer multiple RRSPs to a single RRIF? Do I need to transfer them all at once or can I do them each over time?”

Sid V.

Before the end of the year you turn 71, you must close all of your Registered Retirement Savings Plan (RRSP) accounts and either convert them to a Registered Retirement Income Fund (RRIF), buy an annuity, or take the amount as cash. You can learn about these options in this previous Re: Investing question.

You can transfer multiple RRSPs to one RRIF, or you can hold multiple RRIFs – it’s up to you. You also do not need to transfer all of your RRSP funds at once – you can do this over time if you want. However, once you have opened and start using your RRIF, you must make minimum withdrawals, with the amount based on your age.

Speak to a registered financial advisor about your options, and to learn the options that best fit your retirement needs and personal financial situation.

“How will my Canada Pension Plan (CPP) payments be calculated when I retire at age 65?”

“How will my Canada Pension Plan (CPP) payments be calculated when I retire at age 65?”

Vera L.

The Canada Pension Plan (CPP) is a type of federal government retirement benefit. What you get depends on what you paid into the plan while you were working. You can receive monthly payments starting as early as your 60th birthday. You must be 59 or older and apply 9 months before you retire.

“What is the minimum RRIF withdrawal for a 56 year old?”

“What is the minimum RRIF withdrawal for a 56 year old?”

Rohini

The minimum withdrawal required for a Registered Retirement Income Fund (RRIF) is based on your age. At age 70 and under, the formula to calculate the minimum withdrawal is:

1/(90 – age)

At age 56, this would be 1/(90-56), or approximately 2.94%. Your financial institution or financial advisor can also assist with calculating this minimum amount based on your age and the value of your RRIF. Learn more about making withdrawals from a RRIF.

“Where can I get information about when there is an upcoming IPO?”

“Where can I get information about when there is an upcoming IPO?”

Kawsar J.

An initial public offering (IPO) is the first sale of stock by a private company to the public. It’s often called “going public”. You can learn about why companies go public on GetSmarterAboutMoney.ca.

IPOs may be more risky than a stock that’s been on the stock market for a while because they typically have limited history, and you should always do your homework. Before you decide, it is important to get some information into how the company works. To get some information, investors can read the prospectus from the company issuing the IPO. The prospectus describes the business plan and notes important risk factors. Check whether the company is making money or when it expects to become profitable. This document can be found on the System for Electronic Document Analysis and Retrieval (SEDAR).

Information on upcoming IPOs is relayed through stock exchanges where the stock will be sold, through brokers, newspapers, and new filings on SEDAR. Always check the registration of any firm or individual who offers you an IPO. You can do this by visiting CheckBeforeYouInvest.ca.

“How much income can I expect from my RRSP?”

“How much income can I expect from my RRSP?”

Carl M.

A Registered Retirement Savings Plan (RRSP) is an account, registered with the federal government that is generally used to save for retirement. You can hold a variety of investments in an RRSP, and how your savings grow depend on the type of investments you are holding and their growth rates. Learn more about RRSPs, and read this previous Re: Investing question to learn about your RRSP options at retirement.

The RRSP Savings Calculator on GetSmarterAboutMoney.ca can provide you with an estimation of the income your RRSP may generate in retirement, based on your current RRSP balance, additional contributions, expected rate of return and the number of years you will need income in retirement.

Speak to a registered financial advisor to learn more about planning for retirement, and determining how you may be able to reach your retirement savings needs and retirement lifestyle goals using an RRSP, and/or other savings options.

“If I have more than one TFSA can I make the maximum annual contribution to them all in any given year?”

“If I have more than one TFSA can I make the maximum annual contribution to them all in any given year?”

Tess C.

The annual Tax-Free Savings Account (TFSA) contribution limit is a single contribution limit for an individual. If you set up multiple TFSAs, you cannot contribute more than your annual contribution limit to all of them combined.

The maximum annual contribution limit for 2017 is $5,500. For example, if you have four TFSA accounts and you would like to equally contribute to them, you can contribute $1,375 to each of them to max out your 2017 contributions.

If you have not contributed the maximum in past years, or have made withdrawals in previous years, you may have additional contribution room available. Generally, your TFSA contribution room is made up of: the TFSA dollar limit for the year, any unused TFSA contribution room from the previous years, and any withdrawals made from the TFSA in the previous year. You can check your contribution room through the Canada Revenue Agency’s My Account service.

You can also learn more about contribution rules through the CRA website.

“If I call the OSC Contact Centre, will I get to speak to a real person?”

“If I call the OSC Contact Centre, will I get to speak to a real person?”

Anonymous

The OSC’s Contact Centre team will answer your call during business hours between 8:30am and 5:00pm. If you call after hours, you can leave a message and we will return your call. Also, the Contact Centre can handle calls in 200 languages. The telephone number is 1-877-785-1555.

“Can I convert my RRIF to an ETF?”

“Can I convert my RRIF to an ETF?”

Diane

A Registered Retirement Income Fund (RRIF) is a savings plan registered with the federal government intended to provide retirement income. A RRIF is set up after closing a Registered Retirement Savings Plan (RRSP). A RRIF, or any other registered plan, is not an investment in itself – but you can hold a wide range of investments within the plan, such as GICs, mutual funds, ETFs, segregated funds, stocks and bonds

An exchange-traded fund (ETF) is an investment fund that holds a collection of investments, such as stocks or bonds owned by a group of investors and managed by a professional money manager. ETFs trade on a stock exchange and can be sold short or margined. You can also trade in futures and options on ETFs. Learn more about ETFs.

You can hold ETFs and a variety of other investments inside a RRIF. Because you can’t make additional contributions to a RRIF once it’s set up, you will need to use existing funds within your RRIF to purchase ETFs if you choose to. A registered financial advisor can help you determine how ETFs fit into your financial plan.

“Do you have to convert all of your RRSPs to RRIFs before you turn 72, as well as all LIRAs to LIFs?”

“Do you have to convert all of your RRSPs to RRIFs before you turn 72, as well as all LIRAs to LIFs?”

Elaine

All Registered Retirement Savings Plans (RRSPs) must be closed by December 31 in the year that you turn 71. However, they do not necessarily have to be converted to Registered Retirement Income Funds (RRIFs), though this is one of the options. Learn more in this previous Re: Investing question. Rules for RRSPs and RRIFs are set and enforced by the . For more information on the rules for RRSPs and RRIFs, visit the Canada Revenue Agency.

A Locked-in Retirement Account (LIRA) is generally set up when a person leaves the pension plan in their current or former place of employment. The rules for LIRAs in Ontario are set and enforced by the Financial Services Commission of Ontario (FSCO). Similarly to RRSPs, by the end of the year that you turn 71, a LIRA must be closed and converted either into a life income fund (LIF) or a life annuity. A LIF owner may apply for a one-time 50% unlocking of funds, however this can only be done in the first 60 days after the set-up of a new LIF. Learn more about LIRAs and LIFs from FSCO.

“How do I make withdrawals from my RDSP?”

“How do I make withdrawals from my RDSP?”

James

Registered Disability Savings Plans (RDSPs) are a type of registered plan that allow people with disabilities (who qualifies for the Disability Tax Credit) and their families to save for their future. Government grants add to your savings and your investments grow tax-free. Learn more about RDSPs.

Since an RDSP is a long-term savings plan, there are specific conditions about taking money out. Generally, money can be withdrawn from an RDSP anytime by the person who manages the RDSP, but with some very important exceptions and restrictions. There are two basic ways to make withdrawals from RDSPs:

Make lump-sum withdrawals – called disability assistance payments (DAPs). Subject repayment rules (the assistance holdback amount), depending how long money from government grants and bonds have been in the plan, and tax consequences.

Set up regular payments – the beneficiary must begin receiving regular payments, called lifetime disability assistance payments (LDAPs), no later than the end of the year they turn 60.

Learn about these two options from the Canada Revenue Agency. For information on either of the above, and how the rules apply to your plan, contact your financial institution or a registered financial advisor.

“What types of accounts should I be saving in?”

“What types of accounts should I be saving in?”

Morgan

When thinking about investments for any savings goal, you should keep in mind your personal and financial circumstances and risk tolerance. There are many different types of account you can use to save, for various savings goals. For example:

This previous Re: Investingquestion may help you understand the types of questions you need to ask when choosing investments for any financial goal. Speak to a registered financial advisor to learn more about the different types of savings accounts and which one(s) will work best for your own personal financial needs and goals.

“I just received a lump sum severance payment with no tax deducted; can I put it into my TFSA to avoid taxes?”

“I just received a lump sum severance payment with no tax deducted; can I put it into my TFSA to avoid taxes?”

Robert

We are not able to provide advice related to your question, however, we do try to provide general information to help. The “tax-free” portion of a tax-free savings account (TFSA) refers to your income growing tax fee – whether you are earning interest, dividends or capital gains – even when withdrawn. Contributions to a TFSA are made with after-tax dollars, and making a contribution to the plan with the lump-sum you received would not prevent you from paying taxes on the sum. The Canada Revenue Agency requires you to pay income taxes on severance pay. As tax rules are enforced by the Canada Revenue Agency, if you have questions we suggest you, contact them. If you do decide to contribute to your TFSA, make sure you are within your contribution limits. You can find out how much room you have available from the Canada Revenue Agency (CRA).

Another option may be to contribute to a registered retirement savings plan (RRSP), a tax-deferred savings plan, if you have contribution room available. With an RRSP, contributions are tax-deductible and your savings grow tax-free within the plan. Withdrawals from the plan are fully taxable as income in the year you withdraw them.

“Who gets the trailing commission on a mutual fund held in a discount brokerage account?”

“Who gets the trailing commission on a mutual fund held in a discount brokerage account?”

Jane M.

Trailing commissions on mutual funds purchased in a discount brokerage account go to the firm.

Some investment fund managers offer a series of their funds that is designed for Discount/DIY investors. These fund series pay a lower trailing commission than do the traditional full service retail series. However, not all discount brokerage firms offer these series of funds.

If you have questions about trailing commissions or other fees, consider your options and always review documents such as Fund Facts prior to purchasing a fund to ensure you understand the costs and other charges associated with your investment.

“Can I invest in a system which tracks the market, but where I can dump stocks if I don’t like them (environmental, humanitarian concerns)?”

“Can I invest in a system which tracks the market, but where I can dump stocks if I don’t like them (environmental, humanitarian concerns)?”

Jozef

Many investors have concerns similar to yours. This is generally referred to as socially responsible investing.

Socially responsible investing can mean taking an investing approach that seeks to avoid harm by not investing in companies in fields such as oil, gas or tobacco. It can also involve a focus on company practices – for example, energy companies that focus on ensuring they follow the best environmental practices.

There are funds available that focus on socially responsible companies, however these may not be set up to track the market. Consider your options before investing, and speak to a registered financial advisor or investment firm to ensure they are aware you want to make this a part of your investment plan.

“I need some emergency funds. If I haven’t paid into my RRSP, can I still withdraw from it?”

“I need some emergency funds. If I haven’t paid into my RRSP, can I still withdraw from it?”

Lena

A registered retirement savings plan (RRSP) is a federally regulated retirement savings option for those eligible that can help you save tax-free until you are ready to retire, and offers other tax advantages. RRSP contribution room is built based on your earned income, up to certain limits, and whether you contribute to a workplace pension plan.

Contributions to RRSPs are not automatic – you must set up an RRSP with a financial institution and make contributions, or, if available, join a group RRSP through your employer. If you have an existing RRSP that you have contributed to, you can make withdrawals from it at any time, subject to withholding tax. You must also report the amount you withdraw as income when you file your taxes. Learn more about making withdrawals from an RRSP before you retire.

“What investment platform pays the most?”

“What investment platform pays the most?”

While we try to answer as many questions as we can, we are not able to provide advice. But we do try to provide general information to help you.

The investment platform you use is not an indicator of how your investments will perform, and no investment platform or financial institution can guarantee you a return.

Before you work with a financial institution, online investment platform or financial advisor, always check their registration and ask questions about how they are paid and how they will work with you. You can check the registration of a firm or advisor with the Canadian Securities Administrators’ National Registration Search, and read these questions to ask a financial advisor.

“Can you open an RRSP if you’ve filed for bankruptcy?”

“Can you open an RRSP if you’ve filed for bankruptcy?”

While the Bankruptcy and Insolvency Act does not specify that you cannot open an RRSP following bankruptcy, ensure you understand the rules around what happens to your income and assets after you’ve filed for bankruptcy. Speak to a qualified financial advisor or accountant for advice related to your individual situation.

“I don’t know much about mutual funds, but I’d like to invest in them.”

“I don’t know much about mutual funds, but I’d like to invest in them.”

George

When you are planning to make an investment, understanding what you are buying and why it’s right for your investment needs is a key first step. A mutual fund is a collection of investments, such as stocks, bonds and other funds owned by a group of investors and managed by a professional money manager. The investment objective of the mutual fund determines what types of securities it buys. A mutual fund can focus on specific types of investments. For example, a fund may invest mainly in government bonds, stocks from large companies, or stocks from certain countries. Or, it may invest in a variety of investments.

When you buy a mutual fund, you’re pooling your money along with other investors. You put money into a mutual fund by buying units or shares of the fund. As more people invest, the fund issues new units or shares. The investments in a mutual fund are managed by a portfolio manager. They manage the fund on a day-to-day basis, deciding when to buy and sell investments according to the investment objectives of the fund.

To learn more about mutual funds, how they work, types of funds, risks of mutual funds and how to buy them, visit GetSmarterAboutMoney.ca.

“Are GICs purchased through a self-directed plan insured?”

“Are GICs purchased through a self-directed plan insured?”

Zehir

Generally, you do not get to choose the coverage you receive. Your financial institution must be a member of an insurance provider for you to receive coverage. Before you open an account, inquire as to what kind of coverage you have for the holdings in that account. If you already have an account, contact your financial institution to learn more. Note that insurance coverage is not a guarantee of the value of your investments, but rather coverage in the case that your financial institution becomes insolvent.

“Which investment is riskier: index funds or mutual funds? I am a senior with a low risk tolerance.”

Since mutual funds and ETFs both hold a mix of investments and investment types (e.g. equities or bonds), different funds will have different levels of risk. A financial advisor can help you determine what level of risk is right for you based on your personal financial situation and risk tolerance. Before you work with a financial advisor, check their registration.

Segregated fund performance is reported by the insurance companies who offer the product. They typically provide information on the fund’s performance on their website including annual returns and fees. However, keep in mind that past performance cannot be used as an indication of future return.

“What are some reasons a company’s share price increases?”

“What are some reasons a company’s share price increases?”

Mandeep K.

A company’s share price is determined by supply and demand based on buyers and sellers who want different prices. Supply is the total number of shares that people want to sell. Demand is the total amount of shares that people want to buy.

If there are more buyers (demand) than sellers of the stock, the buyers bid up the prices of the stock to motivate sellers to get rid of them. The reverse happens if there are more sellers (supply) for the stock than there are buyers. As more owners sell, the holder of the stock lowers the price to entice a buyer to purchase the stocks since there is now more supply than demand.

Why there might be more buyers for a stock than available supply could be based on a number of factors such as a positive outlook for the company, confidence in the market place or economy or that the company’s share price will go up over time.

“Should I cut my losses when share prices drop by 30%?”

“Should I cut my losses when share prices drop by 30%?”

Eric S.

We are not able to provide advice, though we do try to provide general information to help. If you are concerned about the performance of your investments, speak to a qualified financial advisor who can help you determine the best action based on your investment goals and personal financial situation. There are many reasons investment prices may drop. Depending on the type of investments you hold, or the companies that you invest in, learn about some factors that can affect investment prices.

Prolonged periods of high or low prices may indicate a bull or bear market. A bull market happens when investors are optimistic about companies’ growth potential and profit outlook, and stock prices generally rise for an extended period of time until hitting a peak – the opposite is a bear market, where investors turn pessimistic and stock prices generally decline for an extended period of time, before hitting bottom. Learn more about bear markets and how to handle them when it comes to your investments.

If you are concerned about bear (or bull) markets in the future, consider creating an Investment Policy Statement (IPS). Having an IPS can help investors decide what to do in turbulent periods where you may consider buying or selling, and avoid making emotional decisions.

If a deceased RRIF holder has a designated beneficiary, the money in your RRIF will be paid to the beneficiary, but the taxes are paid from the annuitant’s estate. Generally, the deceased’s estate is responsible to pay the deceased’s taxes. For more information, see the Canada Revenue Agency’s publication, Death of a RRIF annuitant.

“Can a TFSA be opened post-mortem, for a deceased spouse?”

The Ontario Securities Commission (OSC) is a Crown corporation that is responsible for regulating the capital markets in Ontario. Learn more about the OSC. As a securities regulator, we do not regulate plans such as TFSAs, or the rules associated with them.

“I want to save for my retirement. What do I do?”

“I want to save for my retirement. What do I do?”

Deciding how and where you save your money is a big part of your retirement plan. In Canada, the federal government, and sometimes employers, offer incentives to help you save money and build your retirement nest egg. These include:

Tax-Free Savings Accounts (TFSAs) – TFSAs let you save tax free for any goal, including retirement. You can’t use contributions to reduce your taxable income, but withdrawals can be made at any time, tax-free. Learn more about TFSAs.

Pension plans – Pension plans, group RRSPs and other savings plans can be a convenient way to save because your contributions come off your pay cheque. And if your employer matches your contributions, your savings power is doubled. Learn more about pension plans.

“How do I invest in bonds?”

“How do I invest in bonds?”

Joyce

When you buy a bond, you’re lending your money to a company or a government (the bond issuer) for a set period of time (the term). The term can be anywhere from a year or less to as long as 30 years. In return, the issuer pays you interest income. On the date the bond becomes due (the maturity date), the issuer is supposed to pay back the face value of the bond in full (your original investment). There are different types of bonds you can invest in, or you can purchase a bond fund – a mutual fund or exchange-traded fund that invests in a number of different bonds. Before you consider investing in bonds, learn about the risks associated with this type of investment, and the factors that can affect bond prices.

“How dated can a Fund Facts sheet be? My sheet is dated Nov 2016, and it is July 2017.”

“How dated can a Fund Facts sheet be? My sheet is dated Nov 2016, and it is July 2017.”

Richard P.

Fund Facts is a user-friendly document that provides important information that you should know about the mutual fund you are buying, such as performance history, investments, risk rating and fees. Mutual fund dealers are required to give investors a copy of the latest Fund Facts before they decide to purchase a mutual fund. Learn more using this interactive sample of Fund Facts.

Fund Facts must be updated by the mutual fund company on an at least an annual basis or more frequently if there has been a material change to the fund that affects the content of document (e.g., a change in investment objectives or an increase in the management fee of the mutual fund). The Fund Facts should be dated within a 12-month period from the date of the fund’s simplified prospectus.

“Which is better: equities or mutual funds?”

“Which is better: equities or mutual funds?”

Abbas

First, though we try to provide as much information as we can, we are not able to provide any specific investment or financial advice. A registered financial advisor can provide advice on the types of investments that are a good fit to your financial goals based on your specific financial circumstances, investment needs, objectives and risk tolerance. Investments generally fall into three categories: equities, fixed income and cash or equivalent investments. Equity investments are another word for investments in the stock market. Fixed income investments aim to pay regular income while protecting your principal, for example, different types of bonds and some GICs. Cash or equivalent investments include savings accounts, fixed-term deposits and highly liquid investments like money market funds.

A mutual fund is an investment that pools money from many people and generally invests in a mix of investments such as (equities) stocks and fixed income (bonds). As an investor, you own part of the mutual fund by buying units. There are many types of mutual funds, each with its own objectives and risks. A professional manager chooses investments that match the fund’s investment objective for risk and return. Learn more about how mutual funds work. Equities, also known as “stocks” are an investment in a specific company. When you buy stocks of a company, you’re basically buying a piece of that company. As an investor, this entitles you to your portion of the company’s profits, typically paid in the form of dividends or you stand to profit if the share stock price increases. Learn more about how stocks work.

“What rate do I use to calculate my RRIF withdrawal when I must convert my RRSP at 72? My wife is 5 years younger than me.”

“What rate do I use to calculate my RRIF withdrawal when I must convert my RRSP at 72? My wife is 5 years younger than me.”

Jim S.

A Registered Retirement Income Fund (RRIF) is an account registered with the federal government that is intended to provide you with a steady income in retirement. You can open a RRIF anytime, but no later than the end of the year you turn 71, not age 72.

If your spouse is younger than you, you can use their age to calculate your minimum amount. This may be a good strategy if you have other sources of income and want to leave your money in your RRIF for as long as possible. RRIFs are generally flexible – you don’t have to have a spousal RRIF or name your spouse as the RRIF beneficiary to use their age for your minimum amount. But you must tell your financial institution that you’re doing so before you make your first RRIF withdrawal. And you can’t change your mind later.

“In a TFSA, can I buy and sell the same stock multiple times?”

“In a TFSA, can I buy and sell the same stock multiple times?”

Armand B.

A Tax-Free Savings Account (TFSA) allows your savings to grow tax-free, and you can withdraw money at any time without paying tax on any gains you make from selling the stocks.

Withdrawals you make can be re-contributed in the same year if you haven’t contributed more than the current maximum of $5,500 a year or in the following year. Investment income earned by, and changes in the value of your TFSA investments will not affect your TFSA contribution room for current or future years. Read this previous Re: Investing question to learn more.

Trades within your TFSA can be made as often as you like, without having to pay a capital gains tax. However, note that conversely you cannot use capital losses on investments in your TFSA to offset the gains. You should be aware that the Canada Revenue Agency (CRA) may audit a TFSA if investors are using their TFSAs to operate a business of trading securities – for example, if trades are too frequent and you earn large gains. Speak to a registered financial advisor or tax professional to learn more or learn more about TFSA’s on the CRA’s website.

“If my ex-spouse transfers his RRSP and LRSP to my name do the funds stay in the same type of accounts?”

“If my ex-spouse transfers his RRSP and LRSP to my name do the funds stay in the same type of accounts?”

CJ

While we try to provide general information to help answer your investing questions, we do not regulate registered plans, such as registered retirement savings plans (RRSPs) and locked-in retirement savings plans (LRSPs), or the rules associated with these plans. The Ministry of the Attorney General in Ontario has information on division of property related to separation and divorce. Speak to a legal representative to understand how division of property would apply to your personal situation.

The rules that govern RRSPs are set out in the Canadian Income Tax Act which is administered by Canada Revenue Agency (CRA). You can get more information on transferring RRSPs on breakdown of marriage on the CRA’s website. LRSP rules are set out in the Pension Benefits Acts and regulations are administered by the Financial Services Commission of Ontario (FSCO) – Pensions. Learn more on FSCO’s website.

The Ontario Securities Commission (OSC) is an independent Crown corporation that is responsible for regulating the capital markets in Ontario. As a regulatory body, the OSC administers and enforces compliance with the provisions of the Securities Act (Ontario) and the Commodity Futures Act (Ontario). Specifically, we work to protect investors and foster fair and efficient markets by making and monitoring compliance with rules governing the securities industry in Ontario.

“What is the tax rate on capital gains?”

“What is the tax rate on capital gains?”

Mellinda B.

A capital gain is when you sell a stock for more than you paid for it. The entire capital gain must be reported as income on your tax return and is taxed at a rate of 50% of net capital gains – the total amount of capital gains minus any capital losses if you sold any stocks for less than you paid in the same year. If you receive capital gains from investments outside Canada, the equivalent Canadian dollar value must be reported on your Canadian tax return and will be taxed accordingly.

Investments held and sold in a tax-deferred registered account – such as an RRSP – are not taxed until you withdraw them. At the time of withdrawal, they are taxed as income.

Learn more about tax and investing, and speak to a qualified tax professional for information related to your personal financial situation and questions related to how tax is applied to registered plans.

“I have an RRSP – can I transfer it to my (non-spouse) partner’s name? If so, how does that work?”

“I have an RRSP – can I transfer it to my (non-spouse) partner’s name? If so, how does that work?”

Ranvir

While we try to provide as much information as possible, we are not able to provide financial advice.

A Registered Retirement Savings Plan (RRSP) is an example of a tax-deferred savings plan that is intended to provide you with a source of income at retirement. The money you make on your RRSP investments is not taxed as long as it stays in the plan. RRSP contributions are based on earned income, up to a certain percentage of your income, annual maximum contribution and other retirement contributions you make (e.g. to a company pension plan). This means that allowable contributions are different for everyone. Learn more about making contributions to an RRSP.

There is no way to change the name on your RRSP account to someone else’s. In addition, you can’t transfer money from your RRSP to the RRSP of someone else. This also applies to any spousal RRSPs that you may be contributing to.

If you or your partner have financial goals that you are trying to accomplish by making this change, we suggest you speak to a registered financial advisor or financial planner who can help you determine the best way to reach your goals based on your personal financial needs and financial situation.

“If I withdraw $10,000 from my TFSA this year, can I put it back into my TFSA next year?”

“If I withdraw $10,000 from my TFSA this year, can I put it back into my TFSA next year?”

Armand B./Raghu

With a tax-free savings account (TFSA), you can make withdrawals whenever you want, for any reason, without paying tax on the amount contributed as well as any income earned in the account. The money you withdraw can be re-contributed in the following year, in addition to the next year’s annual contribution maximum. Generally, your TFSA contribution room is made up of: the TFSA dollar limit for the year, any unused TFSA contribution room from the previous year, and any withdrawals made from the TFSA in the previous year.

If you re-contribute the money in the same year without having available contribution room to do so, you may be charged an over-contribution penalty of 1% per month on the excess amount until you remove it.

“What information does an executor/executrix need?”

“What information does an executor/executrix need?”

Veronika

When you are planning your estate, or if you will be acting as an executor for someone else, communicating your plan ensures your loved ones will have the information they need to carry out your wishes. An information package for key people may include:

the name and contact details of the lawyer or accountant you have used and their function.

Your estate plan and information package should be discussed and provided to those who need it – your executor, spouse, adult children and any other key people. Visit the Ministry of the Attorney General for further information on estate planning, and learn more about communicating your estate plan.

“Does the RRSP withholding tax remain at 10% for multiple withdrawals in one year of $5,000 or less?”

“Does the RRSP withholding tax remain at 10% for multiple withdrawals in one year of $5,000 or less?”

Kevin B.

Generally, financial institutions will immediately deduct the applicable withholding tax based on the amount of each withdrawal. Because withdrawals are fully taxed as income on your income tax return, the amount of the withholding tax may be less than what is owed on the total amount withdrawn in one year.

Your financial institution may apply the withholding tax based on the total amount of multiple withdrawals depending on how often you make them. Speak to your financial institution to learn more about making multiple RRSP withdrawals, and track your withdrawals throughout the year to ensure you are aware of the additional amount you may owe when you file your annual income tax return.

“I withdrew money from my RRSP to buy a house and now I owe tax on the amount I withdrew. Is that correct?”

“I withdrew money from my RRSP to buy a house and now I owe tax on the amount I withdrew. Is that correct?”

Tracy L.

A Registered Retirement Savings Plan (RRSP) is an example of a tax-deferred savings plan that is intended to provide you with a source of income at retirement. You receive immediate tax benefits on your contributions since they are tax deductible on your personal income tax return, and money within the plan grows tax-free.

Any funds taken from an RRSP that don’t meet the conditions of the Home Buyer’s Plan are fully taxable as income in the year you withdraw them. At the time of withdrawal, you will immediately pay a withholding tax. The withholding tax is between 10% and 30%, depending on how much you withdraw (in all provinces except Quebec). You will also have to report the full amount as income in your personal tax return in the year you withdraw it but will receive a credit for the withholding tax paid. Depending on how much you’ve withdrawn, you may need to pay more. The Canada Revenue Agency (CRA) has information on tax rates on withdrawals.

Speak to a qualified tax professional to receive clarification on your own situation.

“Are segregated funds in a RRIF subject to Ontario probate tax at the death of the surviving spouse?”

“Are segregated funds in a RRIF subject to Ontario probate tax at the death of the surviving spouse?”

Gladys F.

We are not able to provide financial or legal advice, but we always try to provide some general information to help you determine the next step. The Ontario Securities Commission (OSC) is an independent Crown corporation that is responsible for regulating the capital markets in Ontario. The OSC does not regulate insurance companies or insurance products, such as segregated funds, and we do not oversee estate planning matters such as probate taxes.

Due to the different types of segregated fund contracts and the terms of those policies, you should consult a financial or tax advisor about the tax treatment of the policy for your personal circumstances. The tax implications may vary based on the individual plan.

For information about probate fees, please contact the Ministry of Finance at 1-866 668 8297 or visit their website at ontario.ca/finance.

“How do I make a withdrawal from my RRSP?”

“How do I make a withdrawal from my RRSP?”

Vivian

You can take money out of your RRSP before you retire for any reason, but you will immediately have to pay a withholding tax, and will have to report the full amount as income in your personal tax return in the year you withdraw it. You’ll also permanently lose the contribution room you originally used to make the contribution.

There are two ways you can withdraw money from your RRSP tax free – up to certain limits and conditions. The government’s Home Buyer’s Plan allows you to borrow up to $25,000 for your first home, as long as you pay it back over the next 15 years. The government’s Lifelong Learning Plan allows you to borrow up to $20,000 for your education or your spouse’s education, as long as you pay it back over the next 10 years. Learn more about withdrawing money from your RRSP before you retire.

“Are there medical, health or age requirements to purchase a segregated fund?”

“Are there medical, health or age requirements to purchase a segregated fund?”

Eric

Segregated (or seg) funds are an investment product sold by life insurance companies. They are individual insurance contracts that invest in one or more underlying securities, such as a mutual fund. Learn more about how segregated funds work.

There are no health or medical requirements to purchase a segregated fund. However, there may be age limits depending on the type of segregated fund you wish to purchase. A financial advisor registered to sell insurance products can advise you on eligibility based on age.

Because segregated funds are an insurance product, they are not regulated by provincial securities administrators (like the Ontario Securities Commission), but rather by provincial insurance regulators. In Ontario this is the Financial Services Commission of Ontario (FSCO). Check that your advisor is registered to sell insurance products in your province before you work with them.

“Should I invest with a financial advisor or should I invest myself in index funds?”

“Should I invest with a financial advisor or should I invest myself in index funds?”

Adrienne

While we are not able to provide advice, we do try to provide general information to help. There are many reasons an investor may choose to work with a financial advisor, for example:

You’re not sure how to manage your finances to investments

You don’t have time to manage your investments

You’re not interested in managing your investments

While you may save commissions using do-it-yourself investing, a financial advisor can help you select a portfolio that is suitable for you and that fits into your overall financial goals. Advisors with financial planning expertise may also be able to help you manage your day-to-day spending and saving, and some advisors may also be able to help you make decisions about insurance coverage, tax planning and estate planning. Learn more about working with an advisor in this Canadian Securities Administrators publication.

For investors who are comfortable learning about different investment products and strategies, and have considered their risk tolerance, do-it-yourself investing may be a good option, or a low cost option such as using an online investment advisor. Consider all options before making a decision, and make sure any financial advisor or online investment advisor you work with is registered in your province.

“What happens if one of my RRSP GICs matures after I am 71?”

“What happens if one of my RRSP GICs matures after I am 71?”

Pam J.

Before December 31 in the year you turn 71, you must close your RRSP. You have three main options – you can convert your RRSP to a RRIF, buy an annuity, or withdraw your entire RRSP.

If you convert your RRSP to a RRIF, you do not need to sell your investments, and there is no tax implication until you start withdrawing funds. If you have a GIC maturing after you are 71, as long as the investment stays within a registered plan, you can continue to hold the GIC. Your financial institution or financial advisor can answer questions about what happens to assets within your account as you start to make withdrawals.

“I want to invest a small amount, but I don’t know how. What are my options if I plan to hold the investment for 1 year?”

When you are first starting to invest, the options can be overwhelming. That said, you’re already a step ahead because you know your time horizon – one year. Your time horizon is connected to your risk tolerance – the amount of risk you’re willing or able to take. One year is considered a short-term investment. This means that while you want your money to grow, if you get poor results, you won’t have time to make back your losses.

Generally, the shorter your time horizon, the lower your risk tolerance. Consider lower-risk investments that are easy to turn into cash. These include high-interest savings accounts, GICs or government bonds. Learn more about different short-term investment options.

“What is your organization? Are you a for-profit financial institution, and what is your purpose?”

“What is your organization? Are you a for-profit financial institution, and what is your purpose?”

Ken

Re: Investing is a website run by the Ontario Securities Commission’s Investor Office.

The Ontario Securities Commission (OSC) is an independent and self-funded Crown corporation, accountable to the Ontario Minister of Finance, that is responsible for regulating the capital markets in Ontario. Our statutory mandate is “to provide protection to investors from unfair, improper or fraudulent practices and to foster fair and efficient capital markets and confidence in capital markets.”

As a regulatory agency, the OSC administers and enforces the Securities Act (Ontario) and the Commodity Futures Act (Ontario). Specifically, the OSC works to protect investors by making and enforcing rules governing the securities industry in Ontario. Learn more about the OSC’s role, and governance.

The Investor Office sets the strategic direction and leads the OSC’s efforts in investor engagement, education, outreach and research. The Office also brings the investor perspective to policy-making and operations. Learn more about Investor Office initiatives, such as Re: Investing.

“I have investments in a RRIF and would like to withdraw some to buy a property. How much tax would I have to pay?”

“I have investments in a RRIF and would like to withdraw some to buy a property. How much tax would I have to pay?”

Linda B.

You are allowed to withdraw as much from your RRIF at any time you want. Here’s how it works:

There is no maximum withdrawal limit.

All withdrawals are fully taxable as income in the year withdrawn.

If you take out more than the minimum amount, you’ll also pay withholding tax on the excess amount. Your financial institution will hold back an amount, based on the withholding tax rates, and pay it directly to the government on your behalf.

Even though withholding tax is deducted from withdrawals that exceed the minimum amount, you may still owe more tax later when you file your income tax return. It depends on your total income and tax situation. Learn more about making withdrawals from your RRIF.

Speak to your financial or income-tax advisor about any other additional costs – such as any transaction costs associated with selling your investments. Investments in non-registered plans are subject to tax depending on the type of investment and income they receive. Learn more about tax on investments.

“Is life insurance alone a good retirement investment plan? Is life insurance a good way to save for my son’s education?”

“Is life insurance alone a good retirement investment plan? Is life insurance a good way to save for my son’s education?”

Laura H.

We are not able to provide financial or legal advice, but we always try to provide some general information to help you determine the next step. It is possible to use certain types of life insurance as a source of retirement income. The amount you receive depends on the type of insurance policy selected. For a general overview about how this works, learn more about leveraging cash value for retirement. A licensed insurance agent can help you decide on the type of policy that would be best for your financial plan. You can check if they are licensed on the Financial Services Commission of Ontario’s website.

Before you consider an insurance policy as a way to save for your goals, consider other options and speak to a registered financial advisor – someone who is able to provide advice and help you reach your financial goals. For example, with registered plans, such as a Registered Education Savings Plan (RESP), you may be eligible to receive additional government grants or bonds to help you reach your goals to save for your son’s education.

Financial advisors who sell you investments may not be qualified to sell you insurance products and vice versa. Before you buy any investments, check to make sure that the person or business you’re dealing with is registered using the Canadian Securities Administrator’s National Registration Search.

“At what rate should you take your retirement money out of your investments during retirement?”

“At what rate should you take your retirement money out of your investments during retirement?”

Chris S.

There is no one right answer to this question – everyone has their own financial needs and personal situation. If you have a financial plan, it may include an estimation of how much of an annual income you need to have the lifestyle you currently do, or to have the lifestyle you want in retirement. You may also receive income from other retirement sources – for example government benefits or a workplace pension plan. The amount you receive from these additional sources will affect the amount you need to withdraw from your investments.

A financial advisor can help you determine your retirement needs, based on your personal and financial situation, as well as your risk tolerance. Check the registration of any financial advisor you consider working with through the Canadian Securities Administrators.

“What are the tax implications if a non-spouse adult is the beneficiary of a RRIF?”

“What are the tax implications if a non-spouse adult is the beneficiary of a RRIF?”

Jane R.

If a Registered Retirement Income Fund (RRIF) beneficiary is not a spouse or common-law partner, or a financially dependent child or grandchild, the entire value of the RRIF will be subject to tax.

The tax implications for a non-spouse or dependent RRIF beneficiary are similar to that of an RRSP. The entire value of the RRIF must be included in the final tax filing of the deceased person and reported as income. Who pays this tax and the tax on additional payments from the RRIF – the beneficiary or the estate – depends on different factors. Generally though, the beneficiary will receive their share of the RRIF after taxes. Speak to a tax expert or estate planning expert to ensure you understand the implications.

“At what age can a child buy stocks?”

“At what age can a child buy stocks?”

Andrew R.

To open a trading account, you must be the age of majority in your province or territory. In Ontario, this is age 18.

The investment firm or dealer you are working with will ask for a number of documents and information to open an account. You can learn more about opening a retail account from the Investment Industry Regulatory Organization of Canada’s (IIROC) brochure, Opening Your Retail Account.

If you want to open a retail account to buy stocks or save money for the benefit of a child, you can do so by setting up a trust account. There are different types of trust accounts. Your investment firm or dealer will still require information on the beneficiary. Speak to your advisor to set up this type of account and to understand what happens once the child reaches the age of majority.

“I turn 71 next year. I have to close my RRSP, but I don’t need the income right away – what are my options?”

“I turn 71 next year. I have to close my RRSP, but I don’t need the income right away – what are my options?”

John M.

You have until December 31 of the year you turn 71 to close your RRSP. You have three main options when closing your RRSP:

Convert the RRSP to a RRIF. This requires a minimum annual withdrawal, which increases as you age but gives you some flexibility. Your investments will continue to grow tax-sheltered but withdrawals are taxed as income in the year withdrawn.

Buy an annuity. Different types of annuities provide different income streams. Payments from annuities are taxed as income.

Take the entire RRSP as cash. Any amount you withdraw is taxed as income in the year withdrawn

You can read more about these options for getting retirement income from your RRSP. If you have contribution room, you may consider using income from one of the options above and add it to a TFSA, which grows tax free until you need the money. Speak to a registered financial advisor to determine which option is best for you based on your personal situation and financial needs.

“Can I rely on the mutual fund company to calculate ACB for determining capital gains or should I track it myself?”

“Can I rely on the mutual fund company to calculate ACB for determining capital gains or should I track it myself?”

Kate

The Canada Revenue Agency (CRA) generally defines adjusted cost base (ACB) as “the cost of a property plus any expenses to acquire it, such as commissions and legal fees”. The ACB is used in the calculation of capital gains and losses for income tax purposes.

The CRA has outlined rules as how to calculate the ACB, especially if you acquired units of stocks or mutual funds at different points in time. Generally, you have to average the purchase price of the investment you bought during the year and use this average as your ACB. Learn more about how to calculate the ABC of identical properties from the CRA.

While a mutual fund company can provide you with the ACB to use in determining your gain or loss, it is important for you to refer to your own investment records to calculate the ACB that is specific to your circumstances. You can speak to your financial or income-tax advisor to properly determine your ACB and calculate your gains and losses for income-tax purposes.

“How can I find out whether a credit union is safe?”

“How can I find out whether a credit union is safe?”

Don F.

Credit unions, like other financial institutions in Canada, are regulated. In Ontario, credit unions and caisses populaires are regulated through a framework which involves the Ministry of Finance, the Financial Services Commission of Ontario (FSCO), and the Deposit Insurance Corporation of Ontario (DICO). For an overview of the responsibilities of each, visit FSCO’s website.

“What is a balanced mix of bond ETFs and equity ETFs in retirement?”

“What is a balanced mix of bond ETFs and equity ETFs in retirement?”

Farrokh T.

We aren’t able to provide investment advice, but we have provided some information to help you get started.

The appropriateness of a portfolio asset mix depends on an individual’s specific financial circumstances, investment needs, objectives and risk tolerance, and many personal factors need to be considered before choosing any investment. A registered financial advisor can provide advice on the types of investments that are a good fit to your investment goals and personal situation, after going through a series of questions to learn about you and your risk tolerance. All investments carry some level of risk, and generally the higher the potential return, the higher the risk. This is called the risk-return relationship. Important considerations when choosing any investment are your time horizon and risk tolerance.

“I hold mutual funds in my RRIF and have recently been approached about investing in segregated funds. Which is better?”

“I hold mutual funds in my RRIF and have recently been approached about investing in segregated funds. Which is better?”

Frank R.

We aren’t able to provide investment advice. You can read more about the difference between mutual funds and segregated funds and checking advisor registration in this previous Re: Investing question.

Keep in mind that while segregated funds provide a guarantee to protect part of the money you invest, it may not be all of your investment – the amount protected is usually 75% to 100%. You must hold your investment for a certain length of time to benefit from the guarantee – usually 10 years – and if you cash out before maturity, the guarantee won’t apply. You will also pay an additional fee for this insurance protection. Learn more about segregated funds.

“Can you transfer money from a segregated fund account to a mutual fund account?”

“Can you transfer money from a segregated fund account to a mutual fund account?”

Melody C.

There are two key points to understand to answer your question. First, segregated funds and mutual funds are two separate types of investment products, not accounts. Because of this, there is no way to directly transfer funds from one to the other without selling the investment first.

Second, segregated funds and mutual funds fall under two separate regulation categories. Segregated funds are an investment product sold through life insurance companies, regulated federally by the Office of the Superintendent of Financial Institutions (OSFI) and sold by insurance advisors. Depending on the seller, segregated funds may also be regulated provincially – in Ontario this is under the Financial Services Commission of Ontario (FSCO). Mutual funds are securities sold through mutual fund dealers, registered with a provincial or territorial securities regulator (like the Ontario Securities Commission) and are sold by financial advisors.

What this means is that the insurance advisor who sells you a segregated fund may not be able to sell you a mutual fund – unless they are separately registered to provide this service. Learn about some different types of advisors and visit CheckBeforeYouInvest.ca to learn how to check registration.

“Is there a difference in annuity payments from an RRSP versus a LIRA?”

“Is there a difference in annuity payments from an RRSP versus a LIRA?”

James

An annuity is a contract with a life insurance company. You deposit a lump sum of money and, in return, you are guaranteed income of a pre-determined amount for a set period of time – or for as long as you live. Annuities are most commonly used to generate retirement income. You can buy an annuity with money from a registered plan – such as an RRSP, a RRIF or a non-registered account. Proceeds from these accounts can be used to purchase either term-certainty annuities or life annuities.

In contrast, Locked-in Retirement Accounts (LIRAs) can only be used to purchase life annuities. Annuity payments depend on the type of annuity you are purchasing, any options you add, and the interest rate at the time of purchase.

Learn more about types of annuities and how annuities work. LIRAs are regulated by province – and different provinces may mean different rules. In Ontario, they are regulated by the Financial Services Commission of Ontario (FSCO). You can learn more about LIRAs on FSCO’s website.

“How do I find a missing GIC?”

“How do I find a missing GIC?”

Jean-Claude J.

If your GIC has been unredeemed for longer than 10 years, you can search for it through the Bank of Canada’s Unclaimed Balances search. The Bank of Canada defines an unclaimed balance as “a Canadian-dollar deposit or negotiable instrument issued or held by a federally regulated bank or trust company that has been transferred to the Bank of Canada after it has been inactive for a period of ten (10) years”. This includes GICs, term-deposits, chequing accounts and savings accounts, to name a few.

If your original investment in the GIC was made less than 10 year ago, or is not found through the website, you may also want to contact your financial institution for more information on how to find your lost GIC.

“How do you calculate adjusted cost base of an investment?”

“How do you calculate adjusted cost base of an investment?”

Marius

The Canada Revenue Agency (CRA) generally defines adjusted cost base (ACB) as “the cost of a property plus any expenses to acquire it, such as commissions and legal fees”. The ACB is used in the calculation of capital gains and losses for income tax purposes.

Investments such as stocks or mutual funds are considered “identical properties,” by the CRA. The CRA has outlined rules as how to calculate the ACB, especially if you acquired units of stocks or mutual funds at different points in time. Generally, you have to average the purchase price of the investment you bought during the year and use this average as your ACB. Learn more about how to calculate the ACB of identical properties from the CRA.

It is important for you to keep all records of your investment transactions and consult your income-tax advisor to properly determine your ACB and calculate your gains and losses for income-tax purposes.

“If I buy stock options (that has a profit), put it in my TFSA and then sell them, do I need to pay the tax for the growth outside my TFSA?”

“If I buy stock options (that has a profit), put it in my TFSA and then sell them, do I need to pay the tax for the growth outside my TFSA?”

Lindsy

If you purchased the stock options outside of your TFSA, moving them into your TFSA may trigger a tax event. For more information about transferring investments from a non-registered account to a TFSA, read the answer to this Re: Investing question. You can also speak to your financial advisor or contact the Canada Revenue Agency (CRA) for more information on this type of transfer.

The CRA has information on qualified investments for registered plans, including TFSAs. The CRA is the regulatory body in Canada that implements and enforces rules related to registered plans, such as TFSAs. Generally securities purchased for registered plans like TFSAs must be purchased through a designated stock exchange. For more information on stock options in registered plans, visit the CRA’s website.

“Can you transfer tax-free from a RRIF to a TFSA?”

“Can you transfer tax-free from a RRIF to a TFSA?”

Susan

Registered Retirement Income Funds (RRIFs) and Tax-Free Savings Accounts (TFSAs) are both accounts registered with the federal government, however they have different purposes. Registered plan rules are regulated through the Canada Revenue Agency – you can learn more about both these plans find contact information through the CRA website.

RRIFs are intended to provide income in retirement, and you must take minimum mandatory withdrawals each year. RRIFs can be set up by converting funds from a Registered Retirement Savings Plan (RRSP). While contributions to RRSPs are tax-deductible, all withdrawals from RRIFs (or RRSPs before you convert them to receive retirement income) are fully taxable in the year withdrawn. TFSAs allow investors to save for any goal tax-free, and contributions are made with after-tax income.

You can’t transfer funds tax-free from a RRIF to a TFSA. You can, however, use funds from a RRIF to add to a TFSA as long as you have available TFSA contribution room. One such type of transfer is an “in-kind transfer”. Like any RRIF withdrawal, you’ll have to include the withdrawal amount as income during tax time.

“When do I need to buy shares to receive the dividend payment?”

“When do I need to buy shares to receive the dividend payment?”

Anna-Maria B.

For an explanation of how dividends work and the dates to know regarding ownership and dividends, read this previous Re: Investing question.

Following the purchase of a stock, it typically takes three days for the stock to be in your account (settlement date). Therefore, you need to buy the stock at least three days before the record date in order to qualify for the dividend.

If you buy a share ex-dividend, you are still entitled to receive dividends, just not the upcoming declared dividend.

Speak to your financial advisor to find out whether you will qualify for the next dividend for the stock you are considering. Learn more about how stocks work.

Before you close your RRSP, any withdrawals you make (with the exception of withdrawals as part of the Home Buyers’ Plan or Lifelong Learning Plan) are subject to withholding taxes – the tax level depends on the amount of the withdrawal and your province of residence. You also have to report the amount you take out on your personal tax return as income. At that time, you may have to pay more tax on the money — on top of the withholding tax. It depends on your total income and tax situation. The Canada Revenue Agency has additional information on withdrawal tax rates, and making withdrawals from your RRSP.

“How do you calculate rate of return?”

“How do you calculate rate of return?”

Pat

Your personal rate of return is determined using the total value of all of your investments, less the initial amount you paid for them and any fees you paid over a specific period of time, usually annually. You can ask your adviser to calculate your return for you, or you can calculate it yourself using a financial calculator or spreadsheet software. Follow the steps on how to calculate your personal rate of return on GetSmarterAboutMoney.ca.

As part of the new cost and performance rules, you will soon begin to receive an annual performance report using standard formulas explaining how your investments have performed over time. The money-weighted rate of return was chosen as the standard method because it is your personal rate of return, factoring in the impact of deposits and withdrawals from your account – and the dates of these transactions. This method of return is ideal for helping you determine whether you are progressing towards your goals. Learn more about the new report on investment performance.

“Can an unregistered advisor advise their family members?”

“Can an unregistered advisor advise their family members?”

Tariq

Generally, anyone in the business of selling securities or offering investment advice in Canada must register with a securities regulator, regardless of whether or not the person they are advising is a family member. Registration helps protect investors because securities regulators will only register firms and individuals that meet specific qualifications and standards. Once registered, advisors must adhere to rules set out by securities regulators, including determining the types of investments that are right for you and providing advice that is suitable (or a good fit) to your investment goals and personal situation. If you plan to work with a financial advisor, visit AreTheyRegistered.ca to check if they are appropriately registered to sell investments or provide investment advice. You can also check if the individual or firm has been the subject of disciplinary action (e.g. for failing to comply with the rules and requirements of registration or for misconduct by the firm or individual against the investing public).Generally, if your advisor is selling securities to the public in Ontario, the securities must be offered under a prospectus (a document that provides detailed information about the security and the company offering it), but there are some exceptions to this rule. For example, in Ontario, if a company is trying to raise money, they may be able to sell to a family member without a prospectus under the Family, Friends and Business Associates prospectus exemption. However, if the company or advisor is involved in selling and advising in those securities, they still need to be registered to do so.

“In terms of the growth (value of the fund), what is the difference between a dividend fund and an index fund?”

“In terms of the growth (value of the fund), what is the difference between a dividend fund and an index fund?”

Kent W.

Dividend funds are a type of mutual fund that aims to hold stocks in companies that pay large dividends. The value of a dividend fund depends on the value of the underlying stocks in the fund and the amount of dividend income earned by the fund.

Index funds are also a type of mutual fund but different than a dividend fund. Index funds aim to hold the same stocks or fixed income securities that make up a particular index (for example, the S&P/TSX Composite Index). The value of an index fund generally tracks the performance of the particular index and will usually go up or down as the index goes up or down.

Learn more about these and other types of mutual funds at GetSmarterAboutMoney.ca. Mutual fund companies are required to create a Fund Facts document for the funds they offer so that investors can easily understand the features of the fund at the time of investment. Use this interactive sample to learn how to read Fund Facts and see an overview of what information is found in the document.

“What are the advantages of adding gold or silver to an RRSP?”

“What are the advantages of adding gold or silver to an RRSP?”

James M.

While we try to answer as many questions as we can, we are not able to provide investment advice. With that in mind, there is no portfolio strategy or asset allocation that is right for everyone. Investments that are right for you may not be right for another investor, and vice versa. A registered financial advisor can help you determine the investments that are right for you based on your risk tolerance, financial goals and personal circumstances. Here are some general questions to ask when you are considering an investment.

As you consider your options, be aware of what constitutes a qualified investment in gold or silver in a registered plan such as an RRSP. The Canada Revenue Agency (CRA) has information on what constitutes a qualified investment.

“Is investing/buying gold by weight through a web-based company a good long term investment?”

“Is investing/buying gold by weight through a web-based company a good long term investment?”

Yvan P.

We aren’t able to provide investment advice so we can’t tell you whether this would be a good investment for you. However, here are some questions you may want to think about before you consider making an investment decision:

Do you understand the investment risks? Every investment carries risk, and it’s important to understand what these risks are and how they may affect the value of your investment before you consider purchasing.

Does this investment fit in my overall investment plan? No one investment is right for everyone. If you’re not sure, consider speaking to a registered financial advisor who can help you create an investment plan to reach your specific goals.

The Autorité des marchés financiers (AMF) offers a variety of resources for consumers in Quebec on its website, including information on investing, retirement planning and preventing financial fraud. Through its consumer site you can also talk to an information agent, file a complaint or report suspicious activity. You can find all of this information at http://www.lautorite.qc.ca/en/consumers.html.

“What is the role of the OSC’s Contact Centre?”

“What is the role of the OSC’s Contact Centre?”

Michelle

The Ontario Securities Commission’s Contact Centre educates and helps to protect individual investors. Investors can use the Contact Centre to learn more about companies or products they are interested in or have been approached about. You can also check the registration status of a company or someone offering investment advice.

The reality is that there is a lot of fraud out there and many people and companies are not registered to sell investments in Ontario. Investors can get in touch if they feel they’ve been a victim of fraud. If something does not feel right either with an investment option or with someone who’s trying to give you investment advice, the Contact Centre can help.

Inquiries and complaints can be submitted any way you want to send them; either by fax, email or by phone. If you’re unsure or have any questions, the Contact Centre is here to help. Inquiries can also be answered in over 200 languages.

“Can I buy stock options for my TFSA?”

“Can I buy stock options for my TFSA?”

R

A stock option is a contract that gives the buyer the right – but not the obligation – to buy or sell a stock at a specific price on or before a certain date. You don’t have to invest directly in the stock. You can just buy the option. Call options give you the right to buy a stock at a certain price by a certain date. Put options give you the right to sell a stock at a certain price by a certain date. Stock options are complex investments, so ensure you understand how they work before you invest. Learn more about stock options.

The Canada Revenue Agency (CRA) has information on qualified investments for registered plans. The CRA is the regulatory body in Canada that implements and enforces rules related to registered plans, such as TFSAs. Generally securities purchased for registered plans like TFSAs must be purchased through a designated stock exchange. For more information on qualified listed securities, visit the CRA’s website.

“What criteria do I use to choose an investment that will grow my RDSP?”

“What criteria do I use to choose an investment that will grow my RDSP?”

Eleana

When thinking about investments for any savings goal (regardless of whether you will hold them in a registered plan like an RDSP), you should keep in mind your personal and financial circumstances and risk tolerance. Although we can’t provide advice on choosing specific investments, we can help you understand the types of questions you need to ask when choosing investments for any financial goal.

What are my goals? Are you looking for safety, income or growth from an investment? You may be looking for a combination of these.

What are the risks of this investment? Generally, the higher the potential return of an investment, the higher the risk. Understand the risks of each investment you consider, and understand the risk-return relationship.

How does the investment work? Do you understand the investment enough to explain it to someone else? Ensure you fully understand how the product works before you invest.

Answering these questions can help you choose an investment asset mix that is right for your personal situation. You may consider speaking with a financial advisor who can help you understand your options and choose your investing strategy.

“What is the right way to withdraw money from an RESP?”

“What is the right way to withdraw money from an RESP?”

Sid

If you are using your registered education savings plan (RESP) for post-secondary education, the plan holder can make withdrawals on behalf of the plan beneficiary (student) in the form of educational assistance payment (EAPs). Note that different types of RESPs may have different rules. You can confirm the withdrawal rules of your plan with your plan provider.

To qualify for EAPs (made up of investment earnings and government grant money in the RESP), you must show proof of enrolment in a qualifying educational program. EAPs are taxable in the hands of the student – most end up paying little or no tax as students generally have little additional income (but this isn’t always the case).

In most cases, you choose the amount and timing of the payments. But students can’t get more than $5,000 in EAP payments for full-time programs, or $2,500 for part-time programs, until they complete 13 weeks of a qualifying program in a row.

“I am 8o years old and need my RRIF to generate 6% income every year. What types of investments should I be looking at?”

“I am 8o years old and need my RRIF to generate 6% income every year. What types of investments should I be looking at?”

Jerry

While we can’t provide investment advice, desired return is one factor many people consider when thinking about investments for their portfolio, however it is not the only consideration. Here are some other questions you might ask yourself before you make a decision:

How much risk can I take? Risk and return are related. Generally, the higher the potential return of an investment, the higher the risk.

Can I afford to lose money? More risk not only comes with the potential for higher returns, but also the potential for greater losses.

When will I need the money? Your time horizon is the length of time you expect to hold an investment. Your time horizon is a factor in which investments you choose – some will have specified terms, and others may be difficult to sell immediately if you need the money.

“What are the criteria to qualify as an eligible investor under the new OM Exemption?”

“What are the criteria to qualify as an eligible investor under the new OM Exemption?”

Jeffrey S.

Generally, securities offered to the public in Ontario must be issued with a prospectus, but there are exceptions. These exemptions are called prospectus exemptions. The offering memorandum (OM) prospectus exemption allows companies to sell securities to a wide range of investors based on an offering memorandum being made available to investors. An offering memorandum is a document that outlines a company’s business and affairs.

Anyone can buy securities under this exemption, but there are limits depending on whether an investor is an eligible or non-eligible investor. There are several ways an individual may qualify as an eligible investor, including having net assets, alone or with a spouse, exceeding $400,000; net income before tax exceeding $75,000 in the previous two calendar years, with an expectation to exceed that level in the current year; and net income, alone or with a spouse, exceeding $125,000 in the previous two calendar years, with an expectation to exceed that level in the current year.

“Is the RDSP grant retroactive to 2008 as well as the bond? We are applying now at age 43.”

“Is the RDSP grant retroactive to 2008 as well as the bond? We are applying now at age 43.”

Christena K.

The Registered Disability Savings Plan (RDSP) was introduced in 2008 as a way to allow families and others to save for the future of a person who is eligible for the disability tax credit. Like similar registered plans, rules are set by the federal government and rules are administered by the Canada Revenue Agency.

The Government of Canada makes contributions to RDSPs in the form of either the Canada disability savings grant or the Canada disability savings bond. The amount received depends on contributions made to the RDSP and family income (how family income is determined depends on the age of the beneficiary). The grant and bond are available until the year the beneficiary turns 49.

“Who can help me find a lost LIRA account? The paperwork has been lost and my independent planner retired.”

“Who can help me find a lost LIRA account? The paperwork has been lost and my independent planner retired.”

Chris

If you leave a defined benefit or defined contribution pension plan before retirement, you have a few options to retain your pension. One of these is to open a locked-in retirement account (or LIRA). A LIRA works much like an RRSP, and you set it up with a bank or other financial institution. This option is usually only available if you are under age 55 at the time of transfer, and, as the name suggests, your money is generally “locked-in” until you retire or reach a certain age.

In Ontario, pensions (and LIRAs) are regulated by the Financial Services Commission of Ontario (FSCO). If you have lost track of your LIRA and are unsure of the financial institution where it was held, you can contact FSCO by email (contactcentre@fsco.gov.on.ca) or phone (1-800-668-0128).

“Can I buy an insurance contract that grows with the stock market?”

“Can I buy an insurance contract that grows with the stock market?”

Frederick W.

First, we should let you know that insurance isn’t something the Ontario Securities Commission has responsibility for. The Financial Services Commission of Ontario (FSCO) is the best place to seek out information on insurance. That said, we try to help with general information as best we can. We also know that insurance plays an important role in many peoples overall financial planning.

Some insurance providers offer indexed universal life insurance investments accounts that expose you to the equity markets. However, just like any stock market investment, growth is not guaranteed.

Consider whether this type of life insurance fits within your financial plan.

“How do I transfer the funds from a mutual fund to an ETF? Do I have to sell it first?”

“How do I transfer the funds from a mutual fund to an ETF? Do I have to sell it first?”

Linda S.

Mutual funds and exchange-traded funds (ETFs) are two distinct products – there is no way to transfer funds directly from one to the other. You must first sell your mutual funds and then purchase ETFs.

You may not be able to purchase ETFs at the same financial institution as you currently hold your mutual funds – this is because ETFs trade like stocks. You need to open a trading account with a full-service or online investment dealer to trade them. Learn more about buying and selling ETFs.

If you are holding the mutual funds in a registered plan, such as an RRSP, you will not need to pay tax on any capital gains from the mutual funds as long as the funds stay within the plan (i.e. you plan to hold the ETFs in the same registered plan). If you are moving funds between two financial institutions, the transfer must be made directly by the financial institution to avoid a tax bill. There may be fees associated with the transfer.

“What’s the best thing to do with a large sum in a LIRA? I am 68 years old.”

“What’s the best thing to do with a large sum in a LIRA? I am 68 years old.”

Roland

On Re: Investing we can provide you with general information, but we aren’t able to provide advice. Advice on how you should invest your money can only be provided by a registered financial advisor who can assess your personal financial circumstances, including financial needs, objectives and risk tolerance.

An advisor can help you set your goals, and build a plan to achieve those goals. They can also help you track your progress and adjust your plan when your financial situation changes.

“How can I make an environmentally ethical investment? I’ve been looking for a mutual fund without oil shares.”

“How can I make an environmentally ethical investment? I’ve been looking for a mutual fund without oil shares.”

Karen

Ethically responsible investing (or socially responsible investing) can refer to either investing in companies or funds that exclude certain industries – for example, armaments, tobacco or environmental hazards – or it may refer to companies that have certain standards or guidelines around the environment, gender diversity or other areas.

As part of The Masters of Money, Rob Carrick gave his take on the case for ethical investing. He points out that ethical investing involves work to find an investment that meets both your financial needs and ethical concerns – it’s important to diversify, for example, choosing investments in more than one sector.

“Is binary options trading available in TFSAs?”

“Is binary options trading available in TFSAs?”

Veronica

We’re glad you contacted us with your question! The types of investment products you can have in a TFSA are set out in income tax rules. You can visit the Canada Revenue Agency’s website to see a list of investments that qualify.

Binary options are said to be like an “all or nothing” wager on how an underlying asset will perform in a limited amount of time. This can make investing in binary options extremely risky, even for seasoned investors. The Canadian Securities Administrators (CSA) are increasingly concerned about binary options trading platforms that are targeting Canadians. The organization recently issued an investor alert to make it clear that no business is currently registered or authorized to sell binary options in Canada. Along with the high investment risk associated with binary options, the online trading platforms used to trade binary options also have a high potential for other frauds (e.g. refusals to credit customers’ accounts or reimburse funds after accepting investors’ money. Even the potential for identity fraud has been linked to scam binary options platforms. Learn more about the risks and frauds associated with binary options.

We strongly encourage you to reach out to our Inquiries and Contact Centre for information. Our Contact Centre also can tell you whether a company is registered to sell investments in Canada. Get in touch by phone (1-877-785-1555) or by email (inquiries@osc.gov.on.ca).

“Where can I start looking to invest money?”

“Where can I start looking to invest money?”

When you’re starting to invest, the options can seem overwhelming! However, before you make any decisions, there are some questions you should ask yourself:

How much do I have to invest? You can start to invest with any amount of money, but some investments may require you to set up an account or get investment advice – which may involve fees.

How much (if any) can I afford to lose? Not only should you consider how much risk you’re able to take, you need to think about how much risk you’re willing to take – this is your risk tolerance.

Do I need access to my money? With some investments, you must lock-in your funds for a set period of time (the term). If you need access to your money at all times, these might not be right for you.

Do I understand the investment I am considering? Above all, it’s important to fully understand how an investment works and what risks are associated with it. For example, is there a chance you’ll lose your whole investment? Ask questions where you invest, and learn about different types of investments on GetSmarterAboutMoney.ca.

“How diversified should one be between countries? Should one invest more in their home country or a particular country?”

“How diversified should one be between countries? Should one invest more in their home country or a particular country?”

Kelsey

There’s no one mix of investments that’s right for everyone – your portfolio’s investments depend on your risk tolerance and financial goals. Diversification of any kind – not just international diversification – can help you reduce the risk in your portfolio. You may also diversify by choosing investments from different industries or different asset classes (cash, fixed income or equities).

However, there are benefits to international diversification. Because Canada is over-weighted in resource and financial sectors, achieving broad diversification in Canada alone can be challenging. Investing in different international markets can provide exposure to additional market sectors that may be unavailable in Canada. Large markets, like the U.S. can also provide global exposure due to the higher number of large multi-national companies headquartered there.

“When a bank charges a fee for an in-kind transfer between RRSP accounts can they actually take the money from the registered account?”

“When a bank charges a fee for an in-kind transfer between RRSP accounts can they actually take the money from the registered account?”

Robert

Rules regarding treatment and administration of RRSPs are set by the Canada Revenue Agency (CRA). For specific information about how RRSP rules apply to you, contact the CRA. The following is general information only.

You can transfer cash and investments between RRSPs you hold at the same or different financial institutions. Tax will not be withheld if the transfer is made directly by the financial institution and amounts you transfer directly to your RRSP do not affect your RRSP deduction limit. You can’t transfer money from your RRSP to the RRSP of someone else. This applies to any spousal RRSPs that you may be contributing to.

One or both of the financial institutions involved may charge you a transfer fee. How this fee is collected depends on the rules set out in the RRSP agreement you have with your financial institution. Learn more about RRSP transfers.

“If my employer puts a percentage of my income as an RRSP contribution, should this amount be added to earned income?”

“If my employer puts a percentage of my income as an RRSP contribution, should this amount be added to earned income?”

Bobby

Thanks for your question, Bobby. Rules regarding treatment and administration of RRSPs are set by the Canada Revenue Agency (CRA). For specific information about your employer’s RRSP contributions, contact the CRA. The following is general information only.

Some employers offer Group RRSPs as a benefit to help employees save for retirement. They are identical to individual RRSPs – only they’re set up by your employer. Your employer’s contributions to your Group RRSP are considered earned and taxable income. However, just like contributions to an individual RRSP, contributions to a Group RRSP – whether made by you or matched by your employer – are tax-deductible to you.

If you are contributing to another RRSP outside of the group RRSP, keep in mind the annual RRSP contribution limits – there are penalties for over-contributions. Learn more about making contributions to an RRSP.

“Do I have to pay tax when I withdraw money from a TFSA?”

“Do I have to pay tax when I withdraw money from a TFSA?”

Raymond G.

A tax-free savings account (TFSA) allows you to save for any financial goal, and withdraw money at any time. Your savings grow tax-free, and you don’t need to pay any tax on withdrawals. However, unlike a registered retirement savings plan (RRSP), the money you contribute to a TFSA is not tax deductible – you contribute after-tax dollars.

There are contribution limits. If you contribute too much to your TFSA, you’ll pay a penalty of 1% per month on the excess amount until you remove it. If you over-contribute deliberately, you’ll pay a 100% tax on any gains or income you make on the excess amount. There are also penalties for holding investments that are considered prohibited by the Canada Revenue Agency (CRA).

You can start to receive CPP as early as 60 (at a reduced rate), and as late as age 70 (at an increased rate). Learn more about contributions to the CPP. ESDC offers the Canadian Retirement Income Calculator that you can use to estimate your retirement income from all sources, including CPP using the information from your latest annual CPP statement.

“What are some short-term investment options?”

“What are some short-term investment options?”

Bedros

Your time horizon – the length of time over which you expect to invest your money – is a key consideration when choosing investments.

Investors with short time horizons tend to look for lower-risk investments that are easy to turn into cash. Learn more about saving for short-term goals and ask these 10 questions when choosing a short-term investment. When you have a short time horizon (up to 5 years), there is little time to earn more or make back losses if the investments lose money or deliver poor investment results.

Time can have a big impact on your savings and the investments that are appropriate to help you meet your financial goals. Our recent issue of Investor News looked at the relationship between time and money – read it now, and subscribe to receive the next issue directly to you inbox.

“What is the best investment to hold in a professional corporation?”

“What is the best investment to hold in a professional corporation?”

Greg

We aren’t able to provide investment advice, but we always try to provide information to help get you to the next step.

It’s important to remember that very few investments would be fit for all investors, all the time, since appropriateness depends on an individual’s specific financial circumstances and risk tolerance, and many personal factors need to be considered before choosing any investment. A registered financial advisor can help you decide on the types of investments that may work for you, after going through a series of questions to learn your personal circumstances and risk tolerance. Some advisors may also be able to help you make decisions about insurance coverage, tax planning and estate planning. Before you work with an advisor, check that they are registered to sell investments and give advice.

“Is the stock market rigged?”

“Is the stock market rigged?”

Michael

No, it’s not “rigged”, but it is complex.

When you buy and sell investments, your money flows through a network of advisors, dealers and marketplaces. The connections between these and other participants can be complicated for investors to navigate, and this may cause lower investor trust and confidence in the markets. However, one way to gain a better understanding of the market is to work with a registered financial advisor, who can provide access to additional information and help explain complex issues.

The Ontario Securities Commission (OSC) is one of the regulators in Canada that make rules that aim to prevent misconduct and maintain the integrity of the capital markets. The OSC’s role is to look out for those people that work hard and play by the rules and provide protection to them from people who don’t. The OSC is dedicated to delivering on its commitment to protect investors, including a focus on the markets – where you buy and sell your investments. The OSC will continue to promote financial stability through oversight of participants and markets. At the Investor Office we’re here to give you information to help you invest wisely and confidently, and ensure the needs of investors are understood by those who make the rules. Check out InvestorOffice.ca for more information on the OSC’s initiatives to enhance investor protection.

“How many years can the OSC go back to investigate fraud? My father was defrauded by a ponzi scheme 10 years ago.”

“How many years can the OSC go back to investigate fraud? My father was defrauded by a ponzi scheme 10 years ago.”

Mary

The limitations period for a proceeding commenced under the Securities Act (Ontario) for securities fraud is 6 years from the date of the occurrence of the last event on which the proceeding is based. How the limitations period is determined can sometimes be a complex analysis, therefore, the OSC is always interested in hearing from anyone who has been defrauded. Among other things, the fraud could be ongoing and there may be opportunities to warn other investors – learn how to contact the OSC.

A legal professional should be consulted to determine the applicable limitations period for a lawsuit in the civil courts.

“How do I deal with fraud on my business and personal bank accounts? I’ve experienced it a few times.”

“How do I deal with fraud on my business and personal bank accounts? I’ve experienced it a few times.”

Ben L.

If you suspect any fraudulent activities in your bank accounts, you should immediately bring your concerns to the attention of your financial institution. If you have been defrauded, bring it to the attention of the police.

“If I have two RRSP accounts, do I have to withdraw the minimum amount from each account at age 71?”

“If I have two RRSP accounts, do I have to withdraw the minimum amount from each account at age 71?”

Jacques P.

There is no minimum annual withdrawal for RRSP accounts. However, by the end of the year that you turn 71, you must close your RRSP. One option when closing your RRSP is to convert it to a registered retirement income fund (RRIF).

You must start withdrawing money from your RRIF in the year after you open it. The annual minimum withdrawal amount is based on your age on January 1, and you must withdraw at least the minimum amount from each of your RRIF accounts if you have more than one. If your spouse is younger than you, you can use their age to calculate your minimum RRIF withdrawal amount.

“What should I look for in an annuity – fees/costs, payout, options, etc.?”

“What should I look for in an annuity – fees/costs, payout, options, etc.?”

Bet M.

An annuity is a contract with a life insurance company. When you buy an annuity, you deposit a lump sum of money, and the insurance company agrees to pay you a guaranteed income for a set period of time – or for the rest of your life. Annuities are money commonly used to generate retirement income. Because your annuity income is calculated at the time you buy the annuity, think about the things that affect annuity income: current interest rates, the amount you deposit, your age, your gender, the length of time payments are guaranteed and the options you add. It’s also important to ask about and understand the fees you’ll pay for your annuity. Some annuities can also be used for financial goals other than retirement income – for example, money for your estate or for charity. Learn more about choosing an annuity.

“What is a mutual fund?”

“What is a mutual fund?”

Yaso

A mutual fund is a collection of investments, such as stocks, bonds and other funds owned by a group of investors and managed by a professional money manager. The investment objective of the mutual fund determines what types of securities it buys. A mutual fund can focus on specific types of investments. For example, a fund may invest mainly in government bonds, stocks from large companies, or stocks from certain countries. Or, it may invest in a variety of investments. Many mutual funds are offered in different series or classes, which are identified by a letter. This letter tells you about its fee structure and other features.

When you buy a mutual fund, you’re pooling your money along with other investors. You put money into a mutual fund by buying units or shares of the fund. As more people invest, the fund issues new units or shares. The investments in a mutual fund are managed by a portfolio manager. They manage the fund on a day-to-day basis, deciding when to buy and sell investments according to the investment objectives of the fund. Learn more about how mutual funds work and consider the risks of this investment.

“I am going to be 65 in May. Is it worth contributing more to my RRSP for 2015 tax purposes?”

“I am going to be 65 in May. Is it worth contributing more to my RRSP for 2015 tax purposes?”

Pat

While we aren’t able to provide investment advice, we’ll try to help by providing some general information about RRSPs.

As a 65-year old, you can still contribute to RRSPs. In fact, you can do so until you are 71 (by that time you must wind them up and may consider transferring the assets to an income fund such as a RRIF). If you’re in a higher income bracket and still have RRSP contribution room, this may be a way to get a larger tax rebate for the 2015 year (keeping in mind the contribution deadline!). That said, there are more things than taxes to consider when investing in RRSPs – such as the cost of the investment itself, its risks, how it’s performing, and how long you’ll want to stay in that investment (also known as your time horizon). We suggest that you consult a professional advisor or a tax expert on what might be the right choice for you.

“Can I deposit more money into a GIC over my term period, or is the account off limits after one lump sum deposit?”

“Can I deposit more money into a GIC over my term period, or is the account off limits after one lump sum deposit?”

Graham

No, you usually cannot add money to an existing Guaranteed Investment Certificate (GIC). The return on your GIC is based on the original amount invested, the interest rate that was set at the beginning, and the funds staying in the investment for the full fixed term (known as the maturation date). If you have additional money that you’d like to put in a GIC, you will need to buy a new one. The interest, fees, and terms being offered to you may be different from what you originally invested in, so be sure to get clear information on the options available to you. Visit GetSmarterAboutMoney.ca for more information on GICs. You may also want to contact the firm or bank that sold you the GIC if you have specific questions about it.

“Can I cash in my RRSP for personal reasons?”

“Can I cash in my RRSP for personal reasons?”

Danny C.

You can take money out of your RRSP before you retire for any reason, but you will be subject to a withholding tax on the money you withdraw, and possibly additional tax on that money at tax time. You’ll also permanently lose the contribution room you originally used to make the contribution.

There are ways you can borrow money from your RRSP tax free – up to certain limits and conditions. The government’s Home Buyer’s Plan allows you to borrow up to $25,000 for your first home, as long as you pay it back over the next 15 years. The government’s Lifelong Learning Plan allows you to borrow up to $20,000 for your education or your spouse’s education, as long as you pay it back over the next 10 years.

“I need to learn more about investing online with a discount brokerage.”

“I need to learn more about investing online with a discount brokerage.”

Terry C.

Online discount brokers are for investors who would like a do-it-yourself (DIY) investing option: Investors who consider themselves DIY investors may choose to forego the assistance of an advisor. Investors can purchase investments and make trades through a registered discount broker that is a member of IIROC. Discount brokerages operate using online platforms. Investors typically pay lower commissions and fees because they don’t get advice about the suitability of the investments they choose to make for themselves. However, discount brokers may provide information on their websites to help clients better understand different types of investments and automated investment tools to help with financial planning or asset allocation.

Learn more about discount brokers and how they compare to online investment advisors and traditional full service investment firms.

Regardless of the type of investment you choose, you may consider holding it in a registered or tax-shltered account, such as a TFSA or RRSP. Read this Re: Investing answer to learn more about how they compare.

“I am an individual with a disability – where is better to invest my money?”

“I am an individual with a disability – where is better to invest my money?”

Laurentina A.

Although we can’t provide you with advice as to how or where to invest your money, we can provide some information to get you started.

If you qualify for the Disability Tax Credit, you may qualify as a beneficiary of a registered disability savings plan (RDSP). RDSPs are federally registered accounts that can help save for the long-term financial security of you or someone close to you with a disability. Contributions to RDSPs are not tax deductible, but savings grow tax free within the plan. There is no tax on investment earnings, as long as they stay in the plan. Depending on where this type of plan is opened, you can hold a variety of investments. Contributions to RDSPs can be made until the beneficiary is 59, and up to age 49, the beneficiary may qualify for government grants and bonds. Learn more about RDSP basics.

“If I notice potentially illegal practices within the exempt market does the OSC have a role to play?”

“If I notice potentially illegal practices within the exempt market does the OSC have a role to play?”

P J

If you suspect illegal activity is taking place, whether in the case of dealings that occur in the exempt market or otherwise, it’s a good idea to contact the OSC. While some aspects may be outside our jurisdiction, we can help put you in touch with those who may be able to investigate the information further, such as law enforcement or other associations or regulators.

“Is CPP the average of your lifetime earnings? If income lower in later years, e.g. from age 59, is it better to take CPP at age 60?”

“Is CPP the average of your lifetime earnings? If income lower in later years, e.g. from age 59, is it better to take CPP at age 60?”

Anonymous

First, we should let you know that we can’t give you any specific investment or financial advice. That said, we do try to help as best we can.

What you receive depends on what you paid into the plan while you were working and your age when you start receiving payments. The earliest you can start receiving monthly Canada Pension Plan (CPP) payments is at your 60th birthday. If you start taking payments before age 65, your monthly payment will be reduced. After age 65 (up to age 70), it will be increased. Find out more about how your age affects your monthly CPP payment.

“What is the best investment for someone over age 60?”

“What is the best investment for someone over age 60?”

Patricia

First, we should let you know that we can’t give you any specific investment or financial advice. That said, we do try to help as best we can.

Regardless of your age, the right type of investment for you depends on your risk tolerance (your ability and willingness to take on risk) and time horizon. Generally, the shorter your time horizon, the lower your risk tolerance.

“Are TFSAs better than RRSPs for long-term investments?”

“Are TFSAs better than RRSPs for long-term investments?”

First, we should let you know that we can’t give you any specific investment or financial advice. That said, we do try to help as best we can.

There are many differences between TSFAs and RRSPs, and you can read about some of them in this previous Re: Investing question.

TSFAs and RRSPs both offer tax advantages to help you reach your savings goals. If you can afford it, a good strategy is to contribute as much as you can to both. But if you have to choose one over the other, make sure you understand how they differ and make your choice based on your own individual financial and tax situation. You may want to speak with a registered financial professional for advice. Learn more about TFSAs and RRSPs.

“Which segregated funds pose the highest risk?”

“Which segregated funds pose the highest risk?”

First, we should let you know that we can’t give you any investment or financial advice or provide any information on specific segregated fund investments. That said, we do try to help as best we can.

Segregated (or seg) funds are an investment product sold by life insurance companies, and are regulated in each province and territory (find yours). They invest in one or more underlying assets, such as a mutual fund. Unlike mutual funds, segregated funds provide a guarantee to protect part of the money you invest (75% to 100%). Even if the underlying fund loses money, you are guaranteed to get back some or all of your principal investment. But you have to hold your investment for a certain length of time (usually 10 years) to benefit from the guarantee. You also pay an additional fee for this insurance protection. All segregated funds carry risks associated with this type of investment. Learn more about the risks of segregated funds.

“I have some money to add to my young son’s savings – what should I do with it?”

“I have some money to add to my young son’s savings – what should I do with it?”

Dot

First, we should let you know that we can’t provide any specific financial or investment advice. That said, we do try to help as best we can.

When considering any type of savings plan or investment, factor in your risk tolerance – your willingness and ability to take on risk. Different investments have different risks. Generally the higher the potential reward of an investment, the higher the risk. If you’re not comfortable losing some or all of your savings, you may consider safer options.

“What is a prospectus?”

“What is a prospectus?”

Jenna S.

Before a company issues shares or other securities to the public, it must file a document known as a prospectus and make it available to any potential investor. The prospectus contains important facts relating to the securities a company is planning to offer to the public, including:

“Does the OSC, GetSmarterAboutMoney.ca or Re: Investing have any literature or books available to the public?”

“Does the OSC, GetSmarterAboutMoney.ca or Re: Investing have any literature or books available to the public?”

Gary D.

Resources on GetSmarterAboutMoney.ca, the GetSmarterAboutMoney.ca blog, the OSC website and Re: Investing are available to all investors. While we do not currently have any resources available to order, the resources are available online to print. The OSC website offers electronic copies of brochures covering a wide variety of topics. See a full list of brochures offered by the OSC.

You can find all of the Investor Office’s latest research and reports at InvestorOffice.ca, including our recent publication, The Investor Perspective. Sign up for Investor News, the Investor Office’s email newsletter, to learn more about new resources and upcoming events.

“What are the pros and cons of REITs?”

“What are the pros and cons of REITs?”

Al P.

We can’t provide advice, only general information. Real estate investment trusts (REITs) are generally riskier investments, so understand all the risks before you consider this type of investment – use this Risk by asset class infographic to see how REITs compare to other investments.

REITs are publicly traded companies (on stock exchanges) that own or operate income-producing real estate. REITs are a type of income trust, which allows companies to pay out their earnings in dividends directly to investors on a regular basis. In exchange, the investors pay the taxes on the earnings, not the trust. This tax treatment means income trusts may offer higher yields to investors. REITs are subject to the same risks as any real estate investment, including quality of the properties and changes in the real estate market. Income trusts can stop paying distributions to investors at any time. This may make the income trust less attractive to investors, which could lower the share value or make it hard to sell the investment.

“How do I invest in the stock market?”

“How do I invest in the stock market?”

Domenic

The stock market brings together people who want to buy stock (shares in a company) with those who want to sell. When you buy stock (or equity) in a company, you receive a piece of the company and become a part owner. Learn more about stocks and the stock market.

You buy stocks through an investment firm, commonly known as a brokerage firm (this may be online), through a representative or advisor (a stockbroker or broker) who places the orders for you.

You may also invest in the stock market through investments such as mutual funds or exchange-traded funds, which hold a collection of investments that often include stocks.

“What is a Labour-Sponsored Investment Fund?”

“What is a Labour-Sponsored Investment Fund?”

Jill

Labour-sponsored investment funds (LSIFs) invest in companies developing new products or markets. You can buy an LSIF from an investment firm or directly from the mutual fund company. The costs may include management fees, performance fees, sales commissions and early redemption fees.

These ventures can be risky, so consider these things if you’re thinking of buying an LSIF:

“How can I find the price I paid for a stock?”

“How can I find the price I paid for a stock?”

Edith S.

The best way to determine the price you paid for a stock is to keep the original purchase receipt; however, if you don’t have this information, you have some other options.

If you bought the shares in the brokerage account where you now hold them, your holdings screen or monthly statement shows a “book value” or “cost value”. That’s your cost, according to the brokerage and it’s what they’ll report to the Canada Revenue Agency on your annual trading summary. Sometimes these values are not exact, but they’re usually close enough.

If your shares are in a different account from where you originally held them, when you transferred the shares, your old brokerage likely provided the new brokerage with the book value. If they didn’t, you may wish to contact your previous broker.

“What is return on equity?”

“What is return on equity?”

Andt

Return on equity (or ROE) is a financial ratio used to measure the profitability of common shareholder equity in a company, and is expressed as a percentage. ROE gives shareholders a sense of how well their money is being used to create profit, and is often referenced in the media and stock analyst reports. You can use ROE to compare profitability of different companies, ideally within the same industry.

At its simplest, ROE is calculated as:

Net income (revenue – expenses) / Shareholder equity

For example, if a company’s net income is $8 million and its shareholder equity is $50 million, its ROE is 16% (ROE = $8 million / $50 million).

“Should I invest in a registered retirement savings plan (RRSP) or try my hand at the stock market?”

“Should I invest in a registered retirement savings plan (RRSP) or try my hand at the stock market?”

Victor

A registered retirement savings plan (RRSP) is an account, registered with the federal government that you use to save for retirement. You can hold a variety of investments in an RRSP, including cash, GICs, bonds, mutual funds, ETFs and individual stocks. Individual stocks can be held within an RRSP or within a regular investment account. Before choosing your investment approach, or any specific investment, consider the risk involved, your risk tolerance and your time horizon.

The money you put into an RRSP is tax-deductible, and your savings are sheltered from tax until you start withdrawing funds in retirement. Learn more about RRSPs. The money you put into a regular investment account is not tax-deductible and any earnings, capital gains (or losses) are subject to tax in the year they are realized.

“What does ex-dividend date mean?”

“What does ex-dividend date mean?”

Carol M.

A dividend is part of a company’s profits that it pays to shareholders. The Board of Directors sets the amount. When a common or preferred share has an upcoming dividend, there are a few terms and dates you should be aware of:

Cum dividend: If you buy shares cum dividend, it means you will receive the dividend – this happens if you purchase the shares before the ex-dividend date.

Ex-dividend date: If you buy shares on or after the ex-dividend date, you will not receive the upcoming dividend. The ex-dividend date is two days before the record date.

Record date: You must officially own a share on the record date to receive the upcoming dividend.

If you buy a share ex-dividend, you are still entitled to receive dividends, just not the upcoming declared dividend. Learn more about how stocks work.

“Are whole and universal life insurance plans good investment tools?”

“Are whole and universal life insurance plans good investment tools?”

Maria

First, we should let you know that insurance isn’t something the OSC has responsibility for. The Financial Services Commission of Ontario (FSCO) is the best place to seek out information on insurance. That said, we try to help with general information as best we can. We also know that insurance plays an important role in many peoples overall financial planning.

Both whole and universal life insurance policies (types of permanent insurance) include savings components that may be used for retirement and estate planning purposes.

With any insurance option, make sure you read and understand the policy and ask questions before making a decision. Learn more about permanent life insurance, and how the investment proceeds or cash value can be used.

“How much do interest rates need to rise to justify deferring an annuity purchase by five years?”

“How much do interest rates need to rise to justify deferring an annuity purchase by five years?”

Jean L.

Thanks for your question! First, we should let you know that we can’t give you any specific investment or financial advice. That said, we do try to help as best we can.

No one can predict how interest rates will change over time. If interest rates are high when you buy your annuity, your annuity payments will be higher than if interest rates were low. That’s because the financial institution predicts it can earn more by investing your money.

But there are other factors that can affect annuity income – the amount you deposit, your age, your gender, the length of time the payments are guaranteed and the options you add. Read these tips for choosing an annuity to see what you can do to get the best value for your investment.

“What is DICO?”

“What is DICO?”

Pierre I.

The Deposit Insurance Corporation of Ontario (DICO) is an agency of the Province of Ontario that is unrelated to the Ontario Securities Commission.

DICO provides deposit insurance for credit unions and caisses populaires in Ontario in the case that your credit union goes out of business. DICO provides up to $100,000 of coverage for deposits in unregistered accounts, and unlimited coverage for deposits in registered plans.

“How can I determine the cost of making a mutual fund investment?”

“How can I determine the cost of making a mutual fund investment?”

Peter L.

Before you invest in a mutual fund, understand what fees you pay directly, such as sales charges, and what fees the fund pays, such as management fees and operating expenses. The fund’s management fee and operating expenses make up a fund’s management expense ratio (MER).

You can find information about fees in a mutual fund’s Fund Facts document – you should be able to find this short and easy-to-read document online for each fund you are considering.

“I would like to know more about robo-advisors in Canada.”

“I would like to know more about robo-advisors in Canada.”

Lee

Online investment advisors, often referred to as “robo-advisors”, are now registered to operate in Ontario. They offer professional money management services to investors by using an interactive website.

Despite what the name might suggest, robo-advisors in Ontario are not entirely-automated computer systems that generate and deliver investment advice – a registered financial advisor is involved in and responsible for the investment decisions that are made for investors through these online channels.

“Is equity crowdfunding allowed in Ontario?”

“Is equity crowdfunding allowed in Ontario?”

Susan I.

Crowdfunding allows businesses to raise capital from a potentially large number of investors.

On November 5, 2015, the securities regulatory authorities in Ontario, Manitoba, Quebec, New Brunswick and Nova Scotia approved crowdfunding as a way for certain firms to raise capital, subject to rules designed to help protect investors. Subject to approval by the Minister of Finance, the crowdfunding rules will come into force on January 25, 2016.

“Are money market mutual funds secure?”

“Are money market mutual funds secure?”

Wayne

Money market funds invest in short-term fixed income securities such as government bonds, treasury bills, bankers’ acceptances, commercial paper and certificates of deposit. They are generally a safer investment (although no investment is completely risk-free), but with a lower potential return than other types of mutual funds.

“What is GetSmarterAboutMoney.ca?”

“What is GetSmarterAboutMoney.ca?”

Michael H.

GetSmarterAboutMoney.ca is a website founded by the OSC that provides unbiased and independent financial tools to help investors make better financial decisions. The website was managed by Investor Education Fund (IEF), an independent non-profit organization founded by the OSC, until April 2015 when IEF merged with the OSC’s Office of the Investor to create the new Investor Office.

GetSmarterAboutMoney.ca has a variety of articles, calculators, quizzes, videos and infographics that cover a wide range of investing and personal finance topics.

“What is the Investor Advisory Panel’s role?”

“What is the Investor Advisory Panel’s role?”

Robert C.

The Investor Advisory Panel (IAP) is an initiative by the OSC to enable investor concerns and voices to be represented in its rule and policy making process. The IAP’s mandate is to solicit and represent the views of investor on the Commission’s policy and rule making initiatives.

“How do you know if an investment pitch is a scam?”

“How do you know if an investment pitch is a scam?”

Elizabeth A.

Be suspicious of any unsolicited email, letter or phone call offering you “high-return, no-risk” investment advice or products. No investment is risk free. Do your own research and be wary of acting on “hot tips” or “limited-time offers”.

“How do I find out if my financial advisor is registered?”

“How do I find out if my financial advisor is registered?”

Paul H.

In general, anyone who sells securities in Ontario or provides advice about investing in securities must be registered with the OSC. There are different categories of registration that may limit what a dealer or adviser may do.

You can check registration to find out if a person or company is registered and in which category.

“How do I know if a company is a public company in Ontario?”

“How do I know if a company is a public company in Ontario?”

Vesna C.

In general, a “reporting issuer” is a corporation that has issued securities to the public. Check the OSC’s Reporting Issuer List to see if a company is currently a reporting issuer (or publicly traded company) in Ontario. If you believe a company is a reporting issuer in Ontario but do not see it listed, contact us.

“What does the Investor Office do?”

“What does the Investor Office do?”

Christine C.

The OSC’s Investor Office was created to give investors information to help them invest wisely and confidently, ensuring their needs are understood by those who make the rules, and to share their voice with the boardrooms of Bay Street.

The Investor Office sets the strategic direction and leads the OSC’s efforts in investor engagement, education and outreach. The Office also advocated for and supports OSC objectives and policy priorities to advance investor protection.

“What is a Commissioner?”

“What is a Commissioner?”

Patrick L.

The OSC is a self-funded Crown corporation, accountable to the Ontario Minister of Finance. The OSC operates under the direction of the Commission. The Commission has two related but independent roles. It serves as the board of directors of the Crown corporation, and it performs a regulatory function, which includes making rules and policies and adjudicating administrative proceedings.

“What was the Mystery Shop study about?”

“What was the Mystery Shop study about?”

James H.

The Mystery Shopping for Investment Advice report described the results of a mystery shop of different types of advisor across Ontario between July and November 2014. The report, released in September 2015, was a joint initiative of the OSC, IIROC and MFDA. The purpose of the mystery shop was to assess retail investors’ experiences and to evaluate the investment advice process.

“What is the MFDA?”

“What is the MFDA?”

Eden K.

In Canada, self-regulatory organizations (SROs) regulate their members’ standards of practice and business conduct in order to promote investor protection. Canada has two main SROs in the financial sector, one of which is the Mutual Fund Dealers Association of Canada (MFDA).

“What is IIROC?”

“What is IIROC?”

Carol W.

In Canada, self-regulatory organizations (SROs) regulate their members’ standards of practice and business conduct in order to promote investor protection. Canada has two main SROs in the financial sector, one of which is the Investment Industry Regulatory Organization of Canada (IIROC).

IIROC sets and enforces rules for investment dealers and for equity marketplaces like the Toronto Stock Exchange and TSX Venture Exchange. It also monitors trading on those marketplaces, approves training courses and disciplines member firms and individuals. Learn more about how regulators protect investors.

“What does the OSC’s Enforcement branch do?”

“What does the OSC’s Enforcement branch do?”

Lola K.

The OSC’s Enforcement branch is responsible for investigating and litigating breaches of the Securities Act (Ontario) and seeking orders in the public interest before the Commission and the courts. This may include addressing tips that come from investors through the OSC’s Inquiries & Contact Centre.

“What is CRM2 and what does it mean for me?”

“What is CRM2 and what does it mean for me?”

Dee L.

CRM2 is a set of new requirements that the Canadian Securities Administrators (CSA) are implementing to ensure investors receive essential information about the costs and performance of their investments. The new requirements, part of the Client Relationship Model Phase 2 (CRM2) cost and performance reporting requirements, apply to all firms registered to deal in securities or act as portfolio managers. The requirements will be phased in over three years, having started July 15, 2014.

This website is brought to you by Ontario’s Investor Office. The Investor Office leads the OSC’s efforts in investor engagement, education, outreach and research. The Office also brings the investor perspective to policy-making and operations.

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HOW THIS WORKS:

Re: Investing only answers questions that are of a general nature. We cannot provide financial advice specific to your situation or provide any other legal, tax or professional advice. We are also unable to comment on enforcement proceedings and judgements, or provide you with information that involves investments outside of Canada. If you want information about a specific financial or investing issue, consult an appropriately qualified professional adviser.

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